ALBANY, N.Y. (NEWS10) — Rising prices are hurting pockets all over the Capital Region and economic uncertainty and fears of a recession are causing some people to reevaluate their spending habits.
Consumer prices rose 8.6 percent from this time last year — the highest rise in over 40 years. The causes: pandemic underspending and ongoing war in Eastern Europe.
“People did not spend much money, but they are getting income, mostly, and a huge extended unemployment benefit,” Kajal Lahiri, Distinguished Professor of Economics at SUNY Albany, said. “They are getting money. That recession, post-pandemic, was the only recession in U.S. history where the disposable income actually increased.”
The federal government is consistently raising interest rates to try and slow down spending. In the housing market, interest rates doubled since January. But, economic uncertainty is causing some people to consider putting off their retirement.
“It is a little bit scary if you saw your 401K account go down by 10 or 20 percent,” Michael Ruger, CFP and Managing Partner at Greenbush Financial Group, said. “That was money I was expecting to have to spend and now it is not there anymore, and does it get worse going into the next year.”
Ruger said while the economy has not quite entered the recession stage, there is still reason to be cautious heading into the end of the year.
“If they can not bring prices down, not by the end of the year, but by the next few months, it is a reality that if people start slowing down or losing jobs, it can be a bit dicey in the short term,” Ruger said.
We would not see the impact of a slowing economy right away. As people ease up on their spending, people could start to see changes at the end of the year.
In the meantime, economic experts tell News10 the best thing to do is reevaluate how you spend your money.
“Save some more,” Ruger said. “Possibly cut off some of those expenses that could be put off and just wait to see where this inflation story goes.”
