Americans struggle with the high cost of living amid record inflation

Geoff Bennett:

Last month, we spoke with the Bandy family in Michigan who have been struggling to make ends meet with soaring prices on everything from groceries to gas. Since then, the burden of record high inflation has continued to push the limits for people across the country, we spoke to a handful of Americans who have been grappling with a higher cost of living. And here's some of what they said.

Vanessa Gonzalez, Connecticut:

Inflation has just kind of made, you know, being a single mom with two kids just that much harder. It wasn't easy anyways, we weren't, you know, rich, I work in a school, but it's just pushed everything to the point of, you know, week by week, day by day, I'm looking at the dollars, check out a lot of my account.

Kevin Reed, Missouri:

I actually am leaving teaching because I can't make enough money. So I cleaned out my classroom yesterday, I actually am going to make more money managing a storage unit than I am teaching.

Joseph Timar, Michigan:

In August, I had a medical emergency which required emergency surgery at the time I had insurance, although I'm still paying those bills now, an extra monthly bill that wasn't there before and on top of a higher cost of living, high cost of transportation, high cost of food, to have that medical expense on top of it, has made things more difficult.

Heidi Severn, New Mexico:

The truth is, I don't perceive that we could continue the way we are in another year. Like it seems like if the costs continue to go up at the rate, they have been going that so many families are struggling around us and ourselves included, I can't even imagine where we would be in a year.

Nichoel Saltekoff, Oregon:

What are their options there? We can't give up, we have kids. It just means that it's going to — it's going to result in us having less to give to them.

Vanessa Gonzalez:

I don't know. Like it doesn't seem this problem is going to go away anytime soon. And that's really scary.

Geoff Bennett:

It's clear that the realities many Americans face are vastly different from some of the economic indicators on paper. The latest example, the U.S. added 390,000 new jobs last month, and the unemployment rate remains steady. To help us put this all into context, we're joined by NPR Business Correspondent, David Gura.

And, David, it's great to have you with us. And look, this new jobs report is strong, there has been hiring across most sectors, a robust 390,000 new jobs. But you heard the stories from folks all across the country, just now they're concerned, inflation is eating into their livelihoods. What tools do the Biden administration and the Federal Reserve have to address this at this point?

David Gura, NPR:

I'll start with the Fed, Geoff, and it's great to be with you. The Federal Reserve is increasing interest rates. It's administering this medicine to the U.S. economy to try to cool down the economy. And what's tricky about that is it doesn't want to do it too much. So much so that it would tip the economy into a deep downturn or recession. Yes, about the White House and here the President's hands are kinds of tied and he's acknowledged this and speeches he's given in recent days, including one after the release of those jobs numbers. What they want to see is these prices start to slow and he's trying to do some things, he and his administration have tried to do some things, tapping the Strategic Petroleum Reserve for one and trying to iron out some of the problems with the supply chain which has contributed to high inflation but his options are limited. He wants to convey to the American people that he hears their complaints, he hears the worries the likes of which we just heard a moment ago. And he and his ministration are taking this seriously. But all the while I think there's some acknowledgement that this is a difficult road that they're going down right now.

Geoff Bennett:

Yeah. And to your point, there is this quandary that if you're Jerome Powell running this economy, you don't want to actually see 390,000 new jobs, because that raises wage pressure and that drives inflation. And that takes direct aim at what the Fed is trying to achieve.

David Gura:

Yeah, he's in a very tricky position here, to put it mildly. The whole Federal Reserve Board is for the point that you raise, which is, again, we're trying to — they're trying to slow or cool the economy just a little bit here. The fear is that we get into this spiral. And, you know, the headlines attract the most attention here that the unemployment rate was stable at 3.6%, or that we had the addition of these 390,000 jobs, but the underlying data matter just as much, if not more, and wages is something of chief concern to the Fed. And, you know, those have ticked up over the course of the last year. They've started to diminish a little bit over these last few months. But certainly wages haven't kept up with the pace of inflation. So it's, it's incredibly complicated. And you're right, people are looking at this from different perspectives and where Americans might want to see their wages keeping up with the price of inflation, as you say, that's not what the Fed is hoping happens at this point in time, Geoff.

Geoff Bennett:

As you mentioned, President Biden he addressed the May jobs report, and he gave us a sense of what to expect in the month. Take a listen.

Joe Biden, (D) U.S. President: And as we move to a new period of stable, steady growth, we should expect to see more moderation. We aren't likely to see the kind of blockbuster job reports month after month, like we had over this past year. But that's a good thing. That's a sign of a healthy economy.

Geoff Bennett:

So what happens then, David, if the job market cools off, hiring cools off, but prices remain high?

David Gura:

A really difficult time for Americans, it's going to set us on the path for recession, which is what certainly the President fears the most all policymakers fear the most, Wall Street fears the most as well. There's been extreme volatility because there's this fear, yes, of inflation of prices going up, but also a worry that the Federal Reserve isn't going to be able to slow those rising prices. You know, you listen to the chorus of investors and analysts and executives, as they talk about this, there is a growing chorus of those who fear that we are on the path toward a recession. I should say that there are others who don't think that the data are indicating that are leading us to that down that path. But that is what's driving by and large, a lot of the volatility that we've seen, this fear that there could be a downturn as a result of all of this. And so what you described, Geoff, is certainly something that would lead to a deep downturn or recession. And, again, that's something that that nobody wants to see. Or it's cyclical, and it happens, but it's certainly something that the Federal Reserve Chair wants to avoid as it goes forward.

Geoff Bennett:

NPR Business Correspondent David Gura. David, it's great to have you with us, friend.

David Gura:

Thank you, Geoff.