The post-pandemic years have not been kind to American consumers. Prices are up, as well as interest rates on credit cards and loans. That has resulted in many families having a hard time making ends meet. And according to a September 2024 article in The Wall Street Journal, Wall Street is worried.
But unlike the physical world, once prices go up, they rarely come back down again — no matter what politicians promise you.
“Even though inflation has begun to decline, costs for most goods and services remain much higher than they were before the pandemic,” said Ketti Rose, CEO of Wealthy Femme, a financial literacy and investing company dedicated to empowering women.
Take the much-maligned price of a dozen eggs. According to CBS News, using Bureau of Labor Statistics data, in 2020, eggs were $1.48 a dozen, on average. As of December of 2024, a dozen eggs were $4.15. Butter went from $3.53 to $4.73, and chicken breast went from $3.29 to $4.10, to name but a few.
Those high prices for everyday goods are being felt exceptionally hard by many who became too optimistic during the pandemic years, said Joe Camberato, CEO of NationalBusinessCapital.com. Wages went up fast during COVID, and it felt like the economy was on fire, he said.
“People started spending like it was never going to slow down: Buying bigger homes, upgrading their cars, taking on more debt. It was the whole ‘you make more, you spend more’ philosophy,” Camberato said.
Unfortunately, inflation kicked in, hard.
“If you stretched your budget to buy a new house or car without leaving room for all these unexpected increases, you’re probably feeling the crunch right now,” he added. “That’s why defaults are rising. People didn’t plan for this kind of financial squeeze.”
Another cost hammering Americans is housing, said Rose. Home prices have risen sharply in the past five years.
The median price of a home nationwide in quarter three of 2024 was $420,400, compared to $327,900 in the same quarter of 2020, according to the Federal Reserve Bank of St. Louis.
As for rents, per the latest Census, American suffered the largest annual real increase in gross rental costs, which includes utilities, since 2011. Rose said that housing costs are adding pressure to household budgets.
Americans love credit cards, but carrying too much high-interest debt can hammer the budget. And in 2024, U.S. credit card debt reached $1.17 trillion in the third quarter of 2024, according to the Federal Reserve Bank of New York. That’s the highest it’s been since 1999, when they began tracking it.
“More than 40% of Americans are relying on credit cards to make monthly payments and hence they stay in a revolving debt cycle,” said Rose.
Add to that an average credit card interest rate of 24.37% APR as of January, 2025, according to Investopedia, and it makes it hard to climb out of that cycle.
Higher costs for groceries, utilities and housing have had a profound effect on Americans’ ability to save, said Rose. In fact, according to DepositAccounts, “Overall, balances are down … a lot. Since 2019, the average household savings account balance nationwide has nosedived 32.5%.”
Additionally, according to Yahoo Finance, rising credit card and loan interest rates made it difficult for consumers to pay down their balances, and savings were depleted.
If, like Wall Street, you are worried that your retirement investments are at risk of a market crash, that’s healthy, especially for retirees depending on that money now. So be concerned and attentive, but not overly worried, said Camberato.
“Don’t panic, and don’t try to time the market. Timing the market almost never works,” he said. “Retirees who make big, emotional moves usually do more harm than good.”
Rose agreed. She advised taking a sober assessment of your portfolio based on the right balance of growth-oriented and conservative assets, like dividend stocks, bonds and index funds.
“Diversifying provides some protection against whipsawing market moves,” she said.
She also advised strengthening liquid emergency funds up to 12 months of living expenses and reassessing withdrawal rates. Retirees who plan to withdraw funds using the 4% rule may have to amend that during volatile markets, so that they don’t deplete their nest eggs too quickly.
Essentially, plan for the worst, hope for the best.
