Americans are suffering from sticker shock.
With inflation running at 8.6 percent, its fastest pace in 40 years, people are balking at the rising cost of everything from groceries to gas.
In May 2021, the average price of a dozen large eggs was $1.60. A year later, it was $2.80 — an increase of 75 percent. Ground beef is up 13 percent per pound. A gallon of whole milk costs one-fifth more. Overall, grocery prices were 12 percent higher last month than they were a year earlier, according to the Bureau of Labor Statistics. That was the largest year-over-year increase since 1979.
At the same time, the average driver was paying nearly $275 a month at the pump, up from $167 in June 2021, when a gallon of gas was $3.07, according to Kelley Blue Book’s calculations. Rents, too, are escalating. The median monthly rent was nearly $1,850 in May, according to Realtor.com, up 26 percent from 2019, before the pandemic.
The Federal Reserve is trying to combat runaway price increases by raising interest rates. But that is stoking new fears: If the Fed overdoes it, high rates could cool demand so much that the economy tips into a recession. Many consumers are bracing for the worst.
To cope, people around the country are changing their consumption habits. Some are starting budgets and shopping at discount stores. Others are skipping red meat and fish, walking dogs for extra cash, canceling subscription meal kits or, like Harold Topper of Stamford, Conn., resorting to psychological tricks to blunt the pain.
These days, Mr. Topper fills up his gas tank when it dips by a quarter, because it costs just $25 to refill. In his mind, the price is more palatable than at the half-tank mark or worse.
“After all, isn’t perception reality?” Mr. Topper, 66, said.
In a recent poll conducted by the American Psychological Association, more adults ranked inflation as a top source of stress than any other issue asked about in the poll’s 15-year history. “You can’t turn the news off about money because you have to pay for food or pay for gas,” said Vaile Wright, a psychologist and senior director at the association.
This month, The New York Times asked readers to describe how inflation has affected their lives. Nearly 450 people responded. Below is a glimpse into how five American households have been dealing with it all.
Before price increases began to eat into their budget, Amber Dowdy and her husband, Mike, didn’t think too hard about their spending. The couple, who live with their two children in Muskegon, Mich., enjoyed one nice vacation each year — Universal Studios in Florida, for example — and dined at local restaurants several times a week. Their children, ages 13 and 7, participated in any extracurricular activity that sparked their interest.
That changed around March when Ms. Dowdy, an online history teacher, started to wonder why her checking account was scraping closer to bottom — with little change to spending behavior.
“We have lived comfortably for years,” said Ms. Dowdy, 32, whose husband is a manager at a company that makes machine tools. “But now we’re living paycheck to paycheck.”
By mid-April, the couple began to cut back. As in many households, higher food and gas prices were the biggest culprits. It now costs them $81 for a tank of gas, up from about $50 a year ago. Their grocery bill has jumped 20 percent.
Understand Inflation and How It Impacts You
The family had planned to take a two-week cross-country trip over the summer, driving its camper to the Grand Canyon. But with gas surpassing $5 a gallon, the family has decided to camp locally instead.
Ms. Dowdy also stopped using a house cleaning service, which cost $120 every two weeks. “For a long time, that was fine,” she said. “But it’s not a necessity.”
The family dog, a Great Dane named Luna, no longer gets professionally groomed, which costs $60 a visit. Instead, Ms. Dowdy bought a self-service card for $25, allowing her to wash the dog at the groomer’s facility for just $5. She canceled Audible and Kindle Unlimited subscriptions, and started shopping at Aldi, the discount grocery retailer, “instead of my big, beautiful supermarket.”
The tighter limits on spending are helping the family save about $400 a month.
Tobias Pratt, a 31-year-old mortgage underwriter in Atlanta, decided to look for his first home in the spring of 2021. He had a well-paying job and a solid down payment, and his rent was ticking higher. Getting preapproved for a mortgage seemed like a wise move.
“I finally felt like I was in a good space to do it,” Mr. Pratt said.
But with housing prices so inflated, Mr. Pratt was quickly squeezed out of the market. He decided to try again in March because his lease was about to expire and the rent on his one-bedroom was about to rise by another $200, to $1,900. This time, high mortgage rates, which began climbing earlier this year, have narrowed his prospects even further. Instead of looking solely at single-family homes, he started considering condos — but those are expensive now as well.
“I can afford maybe two-thirds of what I could afford last year,” Mr. Pratt said, adding that the monthly mortgage payment could be as much as $700 higher, depending on the size of the loan. “But with housing prices still soaring, the inventory is limited.”
He also noticed that his grocery bill, which reliably cost about $225 for an online order placed every two weeks, had jumped to $300 in mid-March. “I was like, ‘Whoa, back up a minute,’” he said. “I looked at my last bill and I ordered pretty much the same groceries.”
That was when he decided to start tracking his spending more closely, noting expenses in a journal, looking for places to trim. He eliminated several recurring subscriptions, including Spotify and Experian’s credit tracking service; negotiated a lower-priced plan with his cellphone company; and started ordering less takeout from Uber Eats. To reduce his grocery bill, he swapped name brands for generic products, eliminated bottled water and cut back on extras.
“It is a matter of me just going over the things I don’t need to spend money on right now,” Mr. Pratt said. “I’m just trying to prepare myself if something goes incredibly wrong.”
Lisa Napp of Hillsborough, N.C., was in her local butcher’s shop last month when a fellow customer yelled: “You’ve got to be kidding me!”
The customer wasn’t speaking to anyone in particular. Rather, he was reacting to the higher prices for just about every cut of meat. The butcher said that they weren’t marking up prices above costs any more than usual, but that supplier costs had increased. As the angry customer walked out, another said she was going to have to shop at Walmart. Ms. Napp said the whole scene had left her unsettled.
Ms. Napp buys less meat these days. Instead of New York strip or rib eye, she chooses cheaper cuts, like skirt and flatiron steak, which she has learned to tenderize through brining and braising.
“I have never done that before,” said Ms. Napp, 67, who lives with her husband, Jack, their 27-year-old daughter, Liliana, and her 89-year old mother, Marlene.
As a retired public school administrator who still consults part time for the district, Ms. Napp is accustomed to living on a relatively fixed income. She considers herself lucky because, unlike many of her friends, she and her husband have pensions.
But their discretionary income is still tight, and became squeezed further at the beginning of the year as the cost of gas, milk, butter and eggs rose. Ms. Napp said she was surprised that it would cost $425 to replace a few planks of rotting wood on her porch, nearly double a 2020 estimate.
“What I am experiencing is a slow build leading up to a huge wave,” she said. The latest ripple came in the form of higher payments on a personal loan she took out in 2018 so she could retire a year early and care for her father. Its interest rate is pegged to the Fed’s actions, and the central bank has raised rates by one and a half percentage points since March. At least the $85,000 in federal loans they took out for their daughter’s college are on hold — for now.
The family is cutting back where it can.
Ms. Napp said she had planted a vegetable garden — tomatoes, zucchini, summer squash, basil, red peppers — and planned to swap with neighbors who had done the same. She learned to make pizza, and has stopped buying the family’s favorite local ice cream, now $6.52 a pint.
And while she used to do all her shopping at the co-op that sold locally sourced goods, she now buys cereal and other staples from Dollar Tree. “As frugal as we are, our grocery bill has almost doubled,” Ms. Napp said. “Avocados were once three for $5.00. They are now $3.00 apiece when available.”
Jeremy Walker became aware of a gradual uptick in prices this year, but everything seemed to spike at once after Russia invaded Ukraine in February. What initially captured his attention was the price of bacon — which had nearly doubled at his local grocery chain.
“That’s when I really took notice and started to count every penny,” said Mr. Walker, 54, who lives with his husband, Judd Stark, in Malibu, Calif.
Mr. Stark, an administrator at a nonprofit rehabilitation facility, is the sole earner for their household for now; Mr. Walker was an independent film publicist, but that work mostly dried up during the pandemic.
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What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.
What causes inflation? It can be the result of rising consumer demand. But inflation can also rise and fall based on developments that have little to do with economic conditions, such as limited oil production and supply chain problems.
Is inflation bad? It depends on the circumstances. Fast price increases spell trouble, but moderate price gains can lead to higher wages and job growth.
Can inflation affect the stock market? Rapid inflation typically spells trouble for stocks. Financial assets in general have historically fared badly during inflation booms, while tangible assets like houses have held their value better.
With a single income, the couple have felt the rise in prices more acutely, particularly the cost of Mr. Stark’s 39-mile commute on Route 101 to North Hollywood. It now costs $68 to fill up his 2013 Honda Civic, up from $44 in February. A nearby gas station’s prices recently reached $7 a gallon. To save on gas, Mr. Stark recently stayed at home for a week using vacation time.
Even smaller expenses have his attention now, Mr. Walker said. A recent trip to the cardiologist cost him about $70, if you count the $10 in gas for the 30-minute drive, $20 for parking and a $40 co-pay.
Although he has always been frugal, Mr. Walker has started buying a whole chicken every week after noticing that one close to the expiration date cost just 99 cents a pound. That led him to Ina Garten’s roast chicken recipe, which helps stretch their food budget and compensates for increased costs elsewhere.
“It’s delicious and yields as many as eight meals,” Mr. Walker said. Leftover breast meat is used for a chicken salad, legs and thighs are used for enchiladas, and he makes stock from the carcass.
Though they do most of their shopping at Walmart — where fresh salmon costs $9.99 a pound — Mr. Walker also makes early trips to Ralph’s, their local grocery chain, he said. At around 6:30 a.m., the workers put “Woohoo!” stickers on sale items like beef, so he gets a first look. Frozen puff pastries have become an indulgence.
Mr. Walker said they would like to take a drive up to San Francisco, but for now, “that’s a moving target.”
Mai Fee began to notice last fall that her local Safeway store was often sparsely stocked, which she chalked up to supply chain problems. Then there was the shocking price of red meat earlier this year. Finally, she found an explanation in the news: Inflation was up more than 8 percent.
“That really struck home for me,” said Ms. Fee, 54, who lives with her partner in Vancouver, Wash. “This was a real thing, it was going to be around for a while, and we’ve quantified it now.”
Like millions of other Americans, Ms. Fee, a physical therapist, decided to incorporate more flexibility into her lifestyle last year. She quit her job in a clinic and started her own mobile practice, treating clients in their own homes. But that meant more driving.
Now that gas prices are so high, she tries to group nearby appointments together to avoid zigzagging across town. She drives about 20 fewer miles per week, going to nearby Portland, Ore., only on certain days and never during rush hour.
Higher prices and fears of a recession have prompted Ms. Fee to pull back on spending elsewhere. In a typical year, she might spend $500 to $1,000 to refresh her work wardrobe, but she has refrained from buying anything new. “I am repairing the clothes that need minor mending instead of saying, ‘Ah, I don’t need that anymore,’” she said.
Ms. Fee has been trying to gussy up less expensive — but also less healthy — dishes like mac and cheese by tossing in tuna or vegetables. They also eat out “way less,” Ms. Fee said, drawing out the word “way” for emphasis. “I just don’t think it would fit in the budget right now.”
The prospect of a 2008-style downturn is also concerning. Ms. Fee said she was grateful to work in health care, which is more recession-proof than other industries, but her partner’s job — his income is higher, providing them with a bit of a buffer — may be more at risk, she added. “We’d really be hurting,” she said.
They just returned from a “big trip of a lifetime” to Spain and Portugal, which they paid for before the pandemic and had to reschedule twice. Now, like some of their friends, they’re seriously considering Portugal as a retirement destination because the cost of health care and living is lower.
“It was really hard to come back to the stress of ‘OK, we have to muscle through and make sure we find a way to meet our expenses,’” Ms. Fee said.