Wednesday 10 January 2024

The Daily Money: Americans' purchasing power recovers

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The Daily Money

ALL THE MONEY NEWS YOU NEED TO KNOW

Wed Jan 10 2024

Daniel de Visé | Personal Finance Reporter

Good morning! It's Daniel de Visé with your Daily Money.

If it feels like your paycheck is going further than it has in the past couple of years, it's not your imagination.

This week's inflation report is expected to reveal further progress in slowing consumer price increases that have strained U.S. households since early 2021, Paul Davidson reports.

Economists estimate that the annual inflation figure, due out Thursday, will show a rise of 3.2% in December, compared to 3.1% in the prior month. That's still well above the Federal Reserve's 2% goal.

But by another yardstick – purchasing power – households recently have returned to their pre-inflation financial health, according to some studies.

Lifelike projections on display at the neon.life booth on the opening day of CES at the Las Vegas Convention Center.

Robert Hanashiro, USA TODAY via Imagn Content Services, LLC

Coming soon: more drone deliveries, new AI tech

Shopping at Walmart and Sam's Club is about to get easier, Bailey Schulz reports.

Walmart on Tuesday unveiled several new and upcoming offerings that aim to improve the customer experience, from generative AI-powered search tools to technology that will do away with the receipt check lines at Sam's Club.

"We build technology to serve people, and not the other way around," Walmart President and CEO Doug McMillon said in a news release. "Walmart's purpose is to help people live better and, today, more than ever, advances in technology make it feel like anything is possible."

McMillon took the stage Tuesday afternoon at the CES consumer technology convention in Las Vegas to highlight the company's latest innovations.

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"Beer Mint" sounds like an oxymoron: You take mints to camouflage beer breath.

Nonetheless, Miller Lite is rolling out Beer Mints, Mike Snider reports.

Billed as having "the same great taste as Miller Lite, only without the beer," the new mints ($5 for a tin of 40) go on sale online at millerlitebeermints.com on Jan. 12. A second Beer Mint drop is planned for Jan. 19.

Beer Mints are nonalcoholic, which invites another question: What, exactly, is the point?

Company officials explain: They are being marketed as support for those undertaking Dry January, a month of alcohol abstention.

About The Daily Money

Each weekday, The Daily Money delivers the best consumer news from USA TODAY. We break down financial news and provide the TLDR version: how decisions by the Federal Reserve, government and companies impact you.

Americans' purchasing power recovers as wage growth outpaces inflation

Concerns about inflation have increased in recent months, as stimulus payments from the federal government increased the ability of consumers to spend more than they had since well before the COVID-19-driven recession. This was compounded by difficulties low-paying industries had attracting workers, which made them raise the wages of hundreds of thousands of workers. But just as the pandemic caused prices of some items to soar, it caused prices of other items to plunge. The price of "food at employee sites and schools" fell the most, most likely because many people are now working from home and schools are not at full capacity yet. On the flip side, the price of this household item is soaring . Consumer spending is not the only reason inflation fear has been rekindled for the first time since before The Great Recession. Fuel prices have risen over the course of the year, with a sharp increase in the price of oil. Housing prices have risen at an unprecedented pace, to some extent because of low mortgage rates. Can the government use traditional measures to keep down the prices of many items that make up the consumer price index, even after their recent increase? The Federal Reserve has set interest rates relatively low since the Great Recession to help stimulate the economy. But with the recent COVID-19 recession and inflation creeping up, the Fed may be running out of ways to influence rising prices. If the Fed raises rates to combat inflation, for example, it could put a damper on the already pandemic-stricken economy. Once a month, the Bureau of Labor Statistics provides the consumer price index, the most carefully followed set of data about monthly prices movement. The numbers are broken into dozens of individual categories. The most recent release was for August . Figures are compared to the immediately previous month and to the same month a year ago. In August, the CPI for Urban Consumers rose by 5.3% from the same month last year. The price of some items rose by double digits. Among them "beef and veal" rose 12.2%, fuel oil rose 28.6%, women's clothing jumped 11.9%, and used car prices rose 31.9%. The price of education has also been increasing, and not just during the pandemic. This is the cost of college the year you were born . Even as inflation has become a part of the economic landscape this year, the prices of some items fell in August, and several fell very sharply. A review of the list indicates that price decreases have been partially due to the pandemic. Food at employee sites and schools fell 42.5%. This may be due to a drop in students' attendance because of the virus and summer vacation. Food prices at employee sites were likely affected because of the working-from-home mandate in most companies. The price of telephone hardware and calculators, both often used in offices, dropped 15%. The price of sewing machines and fabric fell 10.8%.

U.S. wage growth has been outpacing inflation, finally giving households as much purchasing power as they had before the run-up in prices, studies say

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