Over the past year and a half or so we've all felt the pandemic's effects on the economy in one form or another. But now, with the world “seemingly” -- and I might add “hope” -- starting to open back up, many of us will more than likely change our pandemic spending habits – both out of necessity and well, to treat ourselves after more than a year of economic austerity. Today, Catherine Collinson, CEO and president of nonprofit Transamerica Institute®, is with us to talk about some of these changing spending patterns.
So, what sort of changes are we likely to begin seeing?
Catherine Collinson: After more than a year of reduced spending on things such as commuting, clothes, haircuts, entertainment, travel, and eating out, spending will be on the uptick. We all need to be mindful that prices for many consumer goods are on the rise and are more expensive than they were before the pandemic and when the economy suddenly hit the brakes.
Al Waller: Aside from hard shell crabs…no pun intended…gas prices seem to be a clear example of this. I mean, I’ve already noticed a steady rise in prices at the pumps – as well as in the volume of traffic I might add. Catherine Collinson: Exactly – nationally, gas has gone up almost a dollar per gallon in the past year, according to The U.S. Energy Information Administration. So not only are people who are returning to work having to buy gas again, they are going to be paying more on each fill up. Other return-to-work items like new clothes and eating out are also more expensive.
Travel prices have also gone up considerably as restrictions have been lifted and people feel comfortable going on vacation again. Rental car prices and stays at local resorts have had some of the biggest increases.
Al Waller: Indeed, and that’s providing you can even find a rental car to rent these days. I mean so many car rental sites sold off huge chunks of their inventory (in some reported cases up to 30%) to make ends meet during the pandemic. Now I suspect many are beginning to feel some serious “sellers’ remorse.”
That aside and given these changes in prices and the economy, how should people get better prepared for the coming months?
Catherine Collinson: The most important thing is to be aware of increased prices. I encourage everyone to create a budget or update their existing one and consider how their lives and spending patterns will change. For those returning to an office, figure in current commuting costs, meal costs, and new work clothes. For all, include any changes to your housing costs.
Al Waller: Good points. Now, let’s turn our attention to those who face debt incurred from the pandemic when they were furloughed, laid off, or forced to work fewer hours. I mean, how do they go about regaining their financial footing?
Catherine Collinson: Now that we're starting to see light at the end of the tunnel, they'll want to focus on paying off debt. I would advise them to do a financial "check-up" where they conduct a holistic review of their finances and evaluate their financial goals. For those who dipped into retirement savings, create a written plan to repay yourself and catch up on those savings.
Al Waller: Well Catherine thanks, as always, for sharing your insights with us on ClearPath – Your Roadmap to Health and Wealth.
Until the next time, this is Al Waller on WYPR, your NPR news station. Thanks for listening.
Clearpath is paid for by the Transamerica Institute.
