WASHINGTON, June 16, 2017 — The cost of living is one of economics most important indicators. The cost of living typically rises over time as along with the natural process of inflation.
Some prices and expenditures do fall, however; cell phones and computers both cost less than they did a decade ago. 2017 has meant major shifts coming in the overall cost of living that will impact consumers and investor portfolios.
Real estate: The biggest increase in the consumer price index this year will be housing prices. There are many hot housing markets across the country, with buyers facing growing competition to find the homes they want. Real estate experts expect that the cost of housing will continue to rise. This is especially true of starter homes. These are the most in-demand homes, but there are relatively few on the market. In many places, these
This is especially true of starter homes. These are the most in-demand homes, but there are relatively few on the market. In many places, these homes sell within hours of hitting the market.
Fuel prices: One consumer bright spot this year is fuel prices. Along with disorder in OPEC, fracking and shale oil have kept downward pressure on oil prices since 2015, and consumers are saving a lot of money at the pump. Fuel prices are considered a forward indicator for price inflation. Fuel costs affect the prices of everything from eggs to plastics, pushing up costs of production and transport. Some economists predict that fuel prices will rise next year. If that happens, the cost of living will be pushed upward in 2018.
Fuel costs affect the prices of everything from eggs to plastics, pushing up costs of production and transport. Some economists predict that fuel prices will rise next year. If that happens, the cost of living will be pushed upward in 2018.
Food prices: There has been some deflation in food prices in 2017. Foodstuffs like eggs are at their lowest prices in many years. This makes things difficult for retail grocers, who operate on thin margins. However, it is great for consumers whose dollars go further. This is not a trend that is expected to continue for long. Global factors affect food prices in America (and vice versa; the “Arab Spring” was partly triggered by rising corn prices in Egypt, resulting from lower Russian exports and increased American ethanol production), and the forecast is for rising food demand abroad.
Global factors affect food prices in America (and vice versa; the “Arab Spring” was partly triggered by rising corn prices in Egypt, resulting from lower Russian exports and increased American ethanol production), and the forecast is for rising food demand abroad.
Insurance: Insurance markets have gone through a lot of change in the last eight years. Those changes have made insurance available to millions who didn’t have it before, but at the same time forced millions to spend more on insurance than they would have. If you want to save money on insurance, you have to get creative.
More people than ever are buying insurance, but at the same time, many companies are pulling out of the market. In some states there are only one or two insurers to choose from on insurance exchanges. Health care costs have risen as a result of higher deductibles and copays. The net impact is to reduce consumer spending power.
Wages: With all of the changes above, wages are growing at a rate of about three percent. This is lower than many people have projected with the current rate of economic growth. As the jobs market continues to rebound, many people thought that wages would increase as well. The increase in prices in various industries is not being offset by higher wages.
This is one of the reasons that so many people do not feel like the economy is getting better, even though the jobs market is strong. In the coming years, it is essential for people to see wage growth and prices decrease if the economy is going to recover and start growing quickly again.
These are just a few factors that can be used to determine cost of living. Overall, things are looking pretty good, but there’s also things that need to change. By understanding where things are at and the predicted trends for the future, you can be better prepared to deal accordingly.
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