Inflation Jumps for Goods and Services Since COVID-19 Pandemic
It is not surprising that since the pandemic started national inflation has jumped, however, no one was expecting that the prices for goods and services would skyrocket to record numbers as well. There are two key reasons for this. The high number of stimuli checks that were distributed nationwide and the labor shortages.
With the pandemic keeping many people at home either due to health reasons or the mass layoffs that occurred for non-essential workers, many were not going out at all. The consequence of that is that not many were going out to businesses to buy goods and services at the same level as pre-pandemic. Many were also laid off, or their job was temporarily shut down due to COVID precautions. The nation anticipated this to be a brief period of shutdowns, but due to the increasing numbers many businesses couldn’t sustain being shut down for so long and had to close their doors permanently, thus employees who were initially sent home temporarily were without a job indefinitely. Many filed for unemployment and received stimulus checks from the government to stay afloat. However, the long period of shutdowns has lasting effects that are coming back to haunt us today.
Essentially what has happened is that there was an imbalance of the supply and demand chain. We see the effects in everyday life whether it be the high gas, food, or used vehicles prices, it has all raised significantly. Consumers are paying 6.1% more at the gas pump than last year, 5.3% more for food, and 2.5% more for used vehicles.
After the initial shutdowns more jobs opened up but the unemployment rate stayed steady at the same level. There is a myriad of reasons for this phenomenon. Some were waiting for their position they once had to restart as promised by their employer pre-shutdown. Others were making more on unemployment than they would make with the wages being offered. Others were still afraid to be working mid-pandemic because of personal or family health concerns. Because of these reasons the nation has experienced a huge labor shortage, and in short, there are jobs but not enough people that want those jobs.
Overall, the pandemic hit everyone hard, and it is hitting the economy hard as well. While there were benefits to the programs the government employed for citizens during the shutdown, there are consequences to them that we are seeing now. Have the inflation changes affected you or your business? If you have questions or need professional help then enlist the help of the professionals at The Center for Financial, Legal, and Tax Planning, Inc. Please contact us at (618) 997-3436 for more information.