Americans struggle to save with rising prices

by ian

This is no surprise, but inflation and high prices are continuing to crush American wallets.

For starters, prices at the pump jumped an average of 30 cents in the last month. Gas prices in at least seven states are higher than they were at the same time last year. Tuesday’s national average for regular gas was $3.86, according to AAA.

The reason for still-high prices rests on a few different factors. Rising crude oil prices, soaring demand, and production cuts in the Middle East have all contributed to the high pump prices.

Andrew Gross, a spokesperson for AAA, indicates that oil prices could be the main bellwether of how prices may look in the future. In his words, “More expensive oil will likely lead to higher prices, so stay tuned.”

Meanwhile, the chief economist at Moody’s expressed a mix of both concern and optimism over the economy following July’s Consumer Price Index Report.

Moody’s Mark Zandi projected confidence in the economy, writing on X (formerly known as Twitter) that “inflation is set to moderate further” in the coming months. But Zandi also stated that Americans are spending $709 more per month on everyday goods and services than they did two years ago.

Zandi refers to this increase as the “economic damage” of previous inflationary trends; and it does appear to be quite damaging.

Bank of America issued a report on 401(k) balances earlier this month. While BOA found that average balances went up almost 10%, it also found that many more are taking money out of their retirement accounts.

Dubbed “hardship withdrawals,” BOA found 36% more customers took such action in the first quarter of this year compared to the year before. That number still increased going into the second quarter.

Lorna Sabbia, head of Retirement and Personal Wealth Solutions at Bank of America, said the data “tells two stories – one of balance growth, optimism from younger employees and maintaining contributions, contrasted with a trend of increased plan withdrawals.”

Sabbia advised that, while these withdrawals are understandable, customers should try to continue investing in their retirement funds.