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Tags: economy | federal reserve | inflation

Poor Grapple With Inflation as Rich Spend This Holiday Season

(Newsmax)

By    |   Friday, 25 November 2022 10:57 AM EST

As the holiday season gets underway, luxury travelers flush with cash have kept the Langham Hotel in Boston busier than expected, with gilded conference rooms reserved for meetings, upscale suites booked out, and the $135-per-adult Thanksgiving brunch sold out weeks in advance.

According to The New York Times, demand for a less swanky food service has soared across town, in Dorchester, at the Catholic Charities free pantry.

Beth Chambers, vice president of basic needs at Catholic Charities Boston, told the outlet that there are so many families using its pantry that it had to close early some days and tell people to come back first thing in the morning.

Nearly three years into the COVID-19 pandemic, the contrast illustrates the sharp divisions that run through America's struggling economy. Many well-heeled consumers are replete with savings and doing well financially, while poor Americans are running low on cash and struggling to make ends meet.

The Federal Reserve is hoping to slow the economy and rein in the fastest inflation in decades with higher interest rates, while simultaneously not throwing the economy into a recession that puts U.S. families out of work. The painful effects of the adjustment period have already been felt by many Americans, according to the Times.

"A lot of these households are moving toward the greater fragility that was the norm before the pandemic," Matthew Luzzetti, chief U.S. economist at Deutsche Bank, said.

Although many working-class households lost jobs at the beginning of the pandemic, hiring quickly rebounded, with strong wage growth, and multiple government stimulus checks helped families accumulate savings in 2020 and 2021.

Up against 18 months of rapid price inflation, the poor's financial cushions are rapidly draining. According to Fed estimates, American families still had $1.7 trillion in pandemic savings as of the middle of this year — about $1.35 trillion was held by the top half of earners and just $350 billion was held by the bottom half.

Far outstripping the approximately 2% pace that was normal pre-pandemic, prices climbed 7.7% through October of this year and many people in lower-income neighborhoods have started turning to credit cards as necessities such as housing, food and car repair become more expensive.

"With the cost of food, the explosive cost of eggs, people are having to come to us more," Chambers, of Catholic Charities, told the Times.

The pantry planned to distribute 1,000 turkeys and 600 gift cards for turkeys, as well as bags of canned creamed corn, cranberry sauce, and other traditional Thanksgiving staples.

Tina Obadiaru, 42, was among those who lined up to receive a turkey. The mother of seven works full time caring for residents at a group home but she still doesn't make enough to cover the costs for her and her family, especially after a rent hike last month raised her monthly payment from $2,000 to $2,500.

One reason the Fed is scrambling to quickly tame inflation is because of the burden it places on the poor. Interest rates have moved from near zero earlier this year to almost 4%, with central bankers indicating there are more increases to come.

© 2022 Newsmax. All rights reserved.


Newsfront
As the holiday season gets underway, luxury travelers flush with cash have kept the Langham Hotel in Boston busier than expected, with gilded conference rooms reserved for meetings, upscale suites booked, and the $135-per-adult Thanksgiving brunch sold out.
economy, federal reserve, inflation
519
2022-57-25
Friday, 25 November 2022 10:57 AM
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