The consumer confidence index keeps diving like a rock in water as prices increase while higher fuel and healthcare insurance costs are eating up the raises they just got. Even when they have money to purchase products they want, they’re often finding them out of stock. It’s not likely to get better anytime soon either.
Robert has a job as a technical engineer at a small company outside Chicago. Over the past year, he worked at home, which he liked, but now his employer is informing all employees to return to the office. That’s when the problems started. “My commute is 24 miles each way and often in traffic, so it takes over an hour to get to the office,” he told me, but what has him worried is that he is now spending over $100 a week for gas.
“I was going to sell my SUV for a smaller hybrid model, and while they were offering me great money for a trade-in, there weren’t any hybrid models available,” he says. “I finally found one at a Hyundai dealer 45 minutes from my house, but by the time I got there, it was sold”. The Hyundai dealer suggested he put a deposit on one that’s due in a couple of weeks, but he told me, “I’m not buying anything without a test drive.”
Welcome to the new economy.
On the heels of new data showing that the U.S. inflation rate jumped to a new 40-year high last month, a study found that more than 80% of American voters believe costs are rising in part because “big corporations are jacking up prices” while raking in record profits.
82% of registered U.S. voters blame big companies for at least some of the recent inflation spike and want elected officials to “take on powerful CEOs and rein in corporate greed to lower prices.Fight Corporate Monopolies
Brands are raking in cash, and why not? Consumers haven’t yet punished brands they like for raising prices, and they keep reading about the money consumers have put away during the pandemic. In addition, people are leaving jobs for higher-paying jobs.
Sure, people are leaving their jobs for higher-paying jobs, but too often, they’re finding that more money doesn’t go as far. Employer health insurance, gas and oil prices, and food prices are rising quickly. The oil companies refuse to drill for new oil because of high costs, and they would buy back company stock to please investors while raking in billions of dollars.
I talked to a buyer at a national retail chain and asked about the impact of rising prices on some brands. She said that she’s starting to see a drop-off in demand as items like coffee and frozen foods increase. “Our coffee prices went up 30%, and we’ve seen a demand in less expensive sizes and brands,” she told me, “but on other items, the demand is still strong even with price increases,” she said. She expects that consumers will eventually switch from some brands to less expensive alternatives.
The rise in gas prices has led to a massive demand for hybrid cars and SUVs when ec=ven gas-powered vehicles are in short supply. A Toyota dealer told me that test-driving hybrids is not an option as they usually are sold before they arrive on the lot.
Add all this up, and you’re finding pissed-off consumers who thought things would return to normal after COVID subsided. And they are looking for someone to blame. But let’s also remember that these same consumers are still buying $6.00 lattes from Starbucks and packing restaurants that have raised prices to cover increased costs.
Brands bought into the story that consumers were “flush with cash” and raised prices while reporting record profits. While some believe they won’t pay the penalty, I think there will be a reckoning. You can only raise prices so much before consumers ask, “what the F*%$?”.