Everyday Expenses Hit by Inflation

HELLO, I'M JENNIFER CRAWFORD. THANK YOU FOR JOINING US. GAS PRICES DROPPING ACROSS THE NATION AND IN FLORIDA WITH WORD OF A PEACE AGREEMENT IN THE MIDDLE EAST. TRIPLE A SAYS DRIVER'S ON AVERAGE IN FLORIDA ARE NOW PAYING LESS THAN $4 A GALLON. THE STATE AVERAGE OF GAS PRICES DROPPED $0.12 OVER THE WEEKEND WITH THE AVERAGE IN FLORIDA. NOW AROUND $3.80 PER GALLON. AND THAT'S ACCORDING TO AAA. WHILE COLLIER COUNTY DRIVERS PAY SOME OF THE HIGHEST PRICES IN THE STATE ABOUT $3 AND $0.91 PER GALLON. LEE, CHARLOTTE AND DESOTO ARE SHOWING SOME OF THE STEEPEST DECLINES. WHILE SOME SEE THIS AS A STEP IN THE RIGHT DIRECTION. AS OIL PRICES DROPPED TO THEIR LOWEST LEVEL SINCE THE MIDDLE EAST WAR BEGAN, STUDIES SHOW PEOPLE ARE STILL FEELING THE STRAIN ON THEIR WALLETS WITH THE CONTINUING RISE IN INFLATION. >> FGCU ECONOMICS, PROFESSOR DOCTOR VICTOR CLAAR JOINS US NOW TO HELP US UNDERSTAND WHAT IS GOING ON IN THE ECONOMY RIGHT NOW. THANK YOU FOR JOINING US. THANKS FOR HAVING ME. SO INFLATION IS AT THE HIGHEST POINT IN 3 NUMBERS TICKED UP TO IT WAS 4.2% WE ALSO ARE SEEING THE PPI THAT HE'S OVER 6%. YOU'RE MENTIONING WHICH. IS JUST UNBELIEVABLE. WHAT IS CONTRIBUTING TO THIS? >> THESE ARE SCARY NUMBERS. IF YOU REMEMBER THAT THE BED, THE BODY THAT DECIDES WHAT INTEREST RATES ARE GOING TO BE AND WHAT WE'RE GOING TO PAY FOR CAR LOANS OR STUDENT LOANS OR ANYTHING ELSE THAT WE FINANCE THEIR GOAL FOR ANNUAL INFLATION FOR CONSUMERS IS TO. 2%. AND THEY'VE REALLY STRUGGLED WITH THAT DURING THE PANDEMIC. AND EVER SINCE WE GET CLOSE, WE GET IN THE THREES ARE LOW FOR YEARS, BUT WE CAN'T SEEM TO GET DOWN TO 2%. AND 2% MAY NOT SEEM LIKE A LOT. BUT IF YOU'VE EXPERIENCED 2% EVERY YEAR FOR 35 YEARS. THE VALUE OF THE DOLLAR WOULD BE HALF OF WHAT IT WAS AT THE BEGINNING OF THE 35 YEARS. SO INFLATION IS CORROSIVE TO YOUR SAVING. IT IS AN INSIDIOUS AND IT MAKES THE PURCHASING POWER OF YOUR PAYCHECK AND THAT MONEY IN YOUR PIGGY DOWN STEADILY. SO THE FED STILL NEEDS TO BE LASER-FOCUSED ON INFLATION. I THINK THE TENSION RIGHT NOW IS WE HAVE A WHITE HOUSE THAT'S VERY INTERESTED IN FOCUSING ON CUTTING INTEREST RATES AND STIMULATING DEMAND. WHEN EVERY ECONOMIST WILL TELL YOU THAT WHEN YOU DO THAT, IT STIRS THE FIRES OF INFLATION, EVEN MORE THAN THAT. >> WHAT HAS CAUSED THIS PPI? >> TO SOAR ABOVE 6%, WHETHER IT'S THE CONSUMER PRICE INDEX OR THE PRODUCER PRICE PRICE INDEX, THE GUILTY PARTY IS THE ONE YOU THINK IT IS. IT'S GAS PRICES BECAUSE NOT ONLY DO WE HAVE TO PUT GAS IN OUR CAKES TO GO TO CHURCH SCHOOL AND WORK. EVERY GROCERY STORE HAS TO PAY FOR SHIPPING OF RASPBERRIES AND TOMATOES AND OTHER COMMODITIES ALL OVER THE COUNTRY. SO ANYTHING THAT'S MOVED FROM ONE LOCATION TO ANOTHER LOCATION NOW HAS A HIGHER COST OF PRODUCTION, HIGHER PRICE OF WHOLESALE. AND IF AMERICAN COMPANIES ARE PAYING 6% OR MORE THAN 6% MORE THAN THEY USED TO A YEAR AGO, EVENTUALLY THAT HAS TO BE PASSED ALONG TO CONSUMERS IN THE FORM OF HIGHER PRICES. SO EVEN THOUGH GAS PRICES MAY MODERATE, IT DOESN'T CHANGE THE FACT THAT PRICES ARE HIGHER THAN THEY'VE BEEN AND INFLATION IS PERSISTENT AND NEVER GOES BACK DOWN. >> AND WE ARE NOW HEARING OBVIOUSLY THAT THERE POTENTIALLY IS THIS DEAL THAT'S BEING SIGNED IN THE MIDDLE EAST. HOW DOES THAT IMPACT OUR ENERGY PRICES? WE ALREADY KNOW THE THE PRICE OF OIL HAS FALLEN DRAMATICALLY TODAY. WHAT DO YOU SEE AS FAR AS LOOKING OUT OF THE NEXT WEEK OR 2 REGARDING GAS PRICES? YEAH, WE'VE GOT SOME TEMPORARY GOOD NEWS. AND I THINK A LOT OF IT WAS UNEXPECTED. AND YOU CAN SEE THAT IN MARKETS. MARKETS NORMALLY DON'T REACT TO THINGS THAT EVERYBODY EXPECTED. >> THEY REACT TO UNEXPECTED NEWS. AND I THINK THIS NEWS ABOUT THE EXTENDED C SPIRE WITH IRAN IS REALLY GOOD NEWS. IN THE SHORT TERM. IT WAS UNEXPECTED, BUT IT'S IMPORTANT TO REMEMBER THAT IT'S JUST THAT IT'S NOT A PEACE TREATY. IT'S NOT A SETTLED NEGOTIATION. NOBODY'S SIGNING OFF ON ANYTHING THAT'S PERMANENT WERE JUST COMING TO EXTEND THE CEASEFIRE A FEW MORE DAYS WHILE NEGOTIATIONS CONTINUE. NOW, YOU HAD MENTIONED THAT TOMORROW. WE HAVE THE FIRST FED MEETING WITH A NEW CHAIRMAN. HOW DOES THAT >> IMPACT ALL OF THIS? BECAUSE THIS IS A GAME CHANGER AT THIS IS LIKE THE WORLD CUP FOR FINANCIAL MARKETS. >> BECAUSE YOU'VE GOT A BRAND NEW FED CHAIR AND APPOINTED BY A PRESIDENT WHO WAS REALLY FRUSTRATED WITH THE PREVIOUS FED CHAIR. I'M NOT SAYING ANYTHING THAT KNOW THAT. I'M NOT SAYING ANYTHING. THAT'S THAT'S NEW NEWS. EVERYBODY KNOWS THAT DONALD TRUMP HAD LOST PATIENCE WITH JEROME POWER, J BOW AND HE WANTED SOMEBODY WHO WOULD MORE AGGRESSIVELY CUT INTEREST RATES BECAUSE PRESIDENT TRUMP SEEMS TO LIKE IT WHEN IT'S CHEAP TO BORROW, BUSINESSES CAN FINANCE PROJECTS CONSUMERS CAN FINANCE APPLIANCE PURCHASES. HE LOVES HOT ECONOMY LIKE THAT. THE TENSION IS THAT WHEN AN ECONOMY GETS TOO HOT, YOU RISK STOKING THE FIRES OF INFLATION AND INFLATION IS ALREADY BURNING. PRETTY HAWK. SO THE NEW FED CHAIR, KEVIN WARSH, HE'S BEEN ON THE OPEN MARKET COMMITTEE BEFORE HE'S VOTED IN THESE MEETINGS BEFORE AND HIS TRACK RECORD THERE WAS THAT HE WAS MUCH MORE CONCERNED ABOUT INFLATION. THEN HE WAS ABOUT DEMAND AND AN ECONOMIC BOOM AND THE JOB MARKET. SO IT'LL BE REALLY INTERESTING TO SEE WHETHER PRESIDENT TRUMP HAS THE NEW FED CHAIR THAT HE THOUGHT HE WAS GETTING WHEN HE NOMINATED HIM AND HE WAS CONFIRMED BY THE SENATE. >> IT'LL BE VERY INTERESTING TO SEE WHAT HAPPENS. THERE ARE A LOT OF FAMILIES THAT ARE ALREADY OPERATING UNDER VERY, VERY TIGHT BUDGETS. CURRENTLY WITH THESE INCREASED NUMBERS FOR INFLATION. WHAT WOULD BE YOUR ADVICE TO WORKING FAMILIES OUT THERE, TOO, REALLY TRY TO GET THROUGH THIS NEXT STRETCH OF TOUGH TIMES ECONOMICALLY. IT. >> ONE OF THE REASONS WHY THE CPI NUMBER WAS SO HOT OVER 4%. THIS TIME IS BECAUSE THE CPI REFLECTS WHAT TYPICAL FAMILY'S PURCHASE. SO ONE OF THE MOST HEAVILY WEIGHTED ITEMS IN THAT SHOPPING CART. IF YOU WANT TO THINK OF IT THAT WAY, EVERY MONTH IS TRANSPORTATION COSTS, INCLUDING GAS. SO IT REMAINS TO BE SEEN JUST HOW PERSISTENT THESE PRICE INCREASES ARE. NO PRICES FOR GAS HAVE MODERATED AT THE PUMP. AND WE'RE ALL THANKFUL FOR THAT. BUT THEY'RE NOT ANYWHERE CLOSE TO THE $3 OR SO A GALLON. THEY WERE A YEAR AGO. SO IF YOU GO TO THE PUMP, I THINK THESE DAYS THE QUESTION ISN'T WHETHER OR NOT PRICES WILL BE HIGH BECAUSE THEY WILL BE HIGH. THE ONLY QUESTION IS HOW HARD YOU'RE GOING TO SWALLOW WHEN YOU SEE WHETHER THEY'RE HIGHER THAN THEY WERE LAST WEEK ORDERING THE LAST BILL UP. AND RIGHT NOW WE HAVE LOTS OF UNCERTAINTY. SO MY ADVICE FOR FAMILIES IS. TREAT EVERY DOLLAR VERY CAREFULLY AND FIT BIG THINGS IN FIRST FIT IN YOUR RENT PAYMENT. YOUR MORTGAGE PAYMENT, YOUR BUDGET FOR GASOLINE AND THE BUDGET. YOU'VE GOT TO PUT GROCERIES ON THE TABLE. ALL OF THOSE THINGS COST MORE THAN THEY DID 5 YEARS AGO. AND ONCE YOU'VE PAID FOR THOSE THINGS AND YOU'VE GOT YOUR FAMILY FED AND HOUSED AND YOU CAN GET THEM TO AND FROM THE PLACES THEY NEED TO GO, THEN ONLY THINK ABOUT THE OTHER THINGS THAT YOU COULD SPEND MONEY ON. IT'S A SERIOUS TIME. ALL RIGHT. WELL, THANK YOU SO MUCH. AND ARE YOU ARE FOR JOINING US OF HAVING HERE.