Tuesday 13 August 2024

Why do consumers feel so dreary?

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The Daily Money

ALL THE MONEY NEWS YOU NEED TO KNOW

Tue Aug 13 2024

Daniel de Visé | Personal Finance Reporter

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

Americans should be feeling pretty good about their finances and the economy.

Stocks partly rebounded from last week's selloff, which was largely triggered by a weak July jobs report, leaving the S&P 500 index 58% above its pre-pandemic level and total household wealth nearly 40% higher. The 4.3% unemployment rate is historically low, despite last month's rise.

So why do consumers still feel so dreary? Paul Davidson explains.

Disney's universe expands

Disney revealed plans for new "lands" and theme-park experiences last weekend at D23: The Ultimate Disney Fan Event in Anaheim, California, Eve Chen reports.

D23 is the official Disney fan club, and its biennial exposition serves as a gathering of some of Disney's biggest fans. The company announces new attractions, reveals movie and television projects and generally celebrates the Disney brand. This year's gathering comes at a time when theme-park attendance is slightly down.

Read Eve's story for a full slate of theme-park announcements.

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If you think your food bill is high, Medora Lee reports, look at your car insurance.

Bankrate estimates the national average cost of full-coverage car insurance in 2024 increased by 26% to $2,543, up $529 from a year earlier. That's six times faster than overall inflation, and more than any food item at the grocery store, including eggs, over the past three years, according to insurance comparison site Jerry.

And the rise isn't over, analysts say.

Where does car insurance cost the most?

About The Daily Money

Each weekday, The Daily Money delivers the best consumer and financial news from USA TODAY, breaking down complex events, providing the TLDR version, and explaining how everything from Fed rate changes to bankruptcies impacts you.

Daniel de Visé covers personal finance for USA Today.

Why aren't people feeling better about the economy?

As the Bureau of Labor Statistics released the Consumer Prices Index for September, all news headlines read about the same. Inflation has not tapered off, as some economists said it would as the U.S. adjusted to the post-pandemic world. There are still enough jobs open, some argued that a loose labor market would not drive up wages. A booming economy would increase production of the items most Americans need for day to day life. Supply of these would be abundant, and Inflation would last a quarter or so, but not more. There were prominent economists who argued otherwise. Former Treasury Secretary Lawrence Summers, who is a well regarded economist, said the assumption inflation could be tamed was false. Government spending to help build jobs after the 2020 recession and more proposed by the Biden Administration would fund a surge in consumer spending. Troubled supply chains would mean many goods would be in low supply. The formula for sharp inflation is already in place, Summers argued. The September CPI supported the alarms of people who believe in Summers' view. What consumers pay for goods and services rose 5.4% on an unadjusted basis compared to September 2020. And, for some Americans, the numbers were worse. Take the basics that most people pay money for each month. In September, the price of beef steak rose 22% from the same month last year. The prices of several other types of meat rose by 12% to 19%. Apples rose over 7% as did chicken. Other notable increases were juices and non-alcoholic drinks up 3.9% What are the negative effects of this inflation? In two words, "consumer spending" While wages for most Americans have risen in the last year, they have rarely risen by 8% or 9%. Consumer spending could be undermined as the prices of things people use regularly run higher than what they make. The worry is this will trigger a much slower economy.

Inflation has eased but Americans still worry about the total rise in prices since COVID. They still shop at discount stores and buy store-brand items

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