Millions of people have seen their livelihoods change since the beginning of the COVID-19 pandemic. You’ve likely seen some negative effects on your life, potentially some positive.
For example, many have noticed a net decrease in their overall budget, with more expenses toward groceries. While many initially saw this as a natural consequence of COVID — since restaurants shut down and people shopped for groceries more — it’s not simply a change in routine, but costs are rising.
COVID’s impact on the economy is being felt in almost all industries. And the COVID related inflation has many projecting a loss or net zero gain in 2022. Of course, if you have lofty financial goals or eager to pay down debt, this can be a wrench in your plan.
The automobile industry and inflation
If you already own a car, then chances are when the pandemic hit, you likely saw a higher ROI on your car. Whether you were working from home (therefore buying gas less) or if you were one of the few who had to commute still, you likely noticed a substantial absence of traffic from everyone working from home.
Car dealerships initially saw an increase in profits with many premium & luxury cars being purchased. However, if you’ve been keeping track (or been eyeing a new vehicle), you’ll notice they seem pricier. It’s not just a feeling. From September 2020 to September 2021, new vehicles’ price has risen 12.1%.
A big reason for this is the low inventory. The vehicles themselves aren’t the issue, but there’s a chip shortage — a massive deficit of these processors.
Additionally, used cars aren’t faring any better. Many “entry-level” or “first-time-buyer” cars have seen a decrease. In 2020 and 2021, this was no doubt due to schools and jobs being shutdown. However, because of the low inventory of new cars, old car prices have been escalating as well, leading many to not purchase a car at all.
The housing industry and the pandemic
Housing is one of the industries that has seen high ups and downs during this global pandemic. Many people relied on AirBnb for supplemental (or even their main) income. Travel and all purchases therein, was one of the areas that was hit hard by COVID. However, housing, in general has started to see a spike.
With an indefinite work from home order in place, many are realizing they don’t need to “live” near their job. If someone previously had a 90 minute commute, they’ve now reclaimed 3 hours of their daily life back. For those with particularly egregious commutes, this is largely seen as a blessing and a “dealbreaker” if companies demand they return.
Realizing they can work anywhere, many landlords and renters realize they can charge more since “location” to downtown is no longer the selling point it once was. Now the dressing, and middle-of-nowhere spaciousness is a perk.
Emergency funds for emergency funds
When COVID hit, many were laid off or furloughed. It wasn’t uncommon for every member of the household to need a new job. Depending on the expertise, some had a harder time than others. People working in retail, food, entertainment, etc. As a result, many took jobs wherever they could which doesn’t bode well for inflation.
This resulted in a many dipping into their emergency funds and the realization that said funds won’t last as long as they hoped. Due to the increase in expenses across myriad industries: food, fuel, and rent. You might be among the 66% of Americans looking at 2022 and hoping you break even.
In the meantime, if you’re eligible, make sure you collect or reach out to the IRS about your fourth stimulus check and make sure you budget to prevent going deep(er) into debt.
Stick to a rigid budget, don’t eat out, and cancel any memberships you may be holding on to.
Image by Gerd Altmann