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Yahoo
a day ago
- Business
- Yahoo
5 Ways Tariffs May Affect Your Budget If You Earn a Low Income
With tariffs wavering back and forth, it's critical to know how these changes can affect your budget. Especially if you're in a lower income bracket, even a small hike in prices can negatively impact your entire month's budget by putting more strain on the already expensive prices. Trending Now: Explore Next: Understanding those changes can help you plan accordingly and, ideally, avoid taking too big of a hit. To that end, GOBankingRates spoked to some experts on the economy for insight into what the future might hold regarding the effects of tariffs — below is what they had to say. There was once a time when people thought of imported goods as fine wine, art or high-end furniture. You may import a luxury vehicle. Of course, no one on a tight budget was thinking about these types of luxury imports. But today, virtually anything and everything can be imported and if it's imported, it will have a tariff. This means higher prices and less purchasing power for your budget. Read Next: 'Pretty much all goods manufactured today are to varying degrees important — there is, for example, no car made in the US and entirely of U.S.-origin parts,' said Dr. Brandon Parsons, economist at Pepperdine Graziadio Business School. 'The tariffs that are going to sneak up on lower-income Americans will be the ones on food — meat, fresh fruits and vegetables and specialty food items,' he added. 'And the most hidden tariff impact will be on processed foods that incorporate imported foodstuffs — think tomato sauce made with Mexican or Canadian tomatoes.' Some have assumed in recent months that companies distributing goods will absorb the cost of these tariffs. But nothing could be further from the truth. 'As Walmart and a growing number of retailers have made very clear, the cost of tariffs will be passed along to consumers,' Parsons said. This means you'll have less purchasing power with your budget. reported that only 10 percent of businesses did not intend to pass along any of the tariff costs to their consumers. What this means for the low-income budget, then, is that items people need to buy will now cost significantly more than they used to. Most people living on low incomes are already struggling to make ends meet, often living paycheck to paycheck. These tariffs will make budgeting for basic, everyday necessities hard. 'Another reason is lower-income families will often live paycheck to paycheck and have a smaller (potentially no) cushion to absorb these higher costs. Without the ability to cover the higher costs created by the tariffs, lower-income families will be forced to adjust what they can purchase to a greater extent than their higher-income counterparts,' said Dr. Wayne Winegarden, senior fellow of business and economics at the Free Market Pacific Research Institute and director of PRI's Center for Medical Economics and Innovation. 'Compounding these problems, the recent bout of inflation has created a huge affordability problem that harmed lower-income families to a greater extent than higher-income ones,' Winegarden added. 'The tariffs will worsen the current affordability problem and further destabilize the household budgets of lower-income and working families.' Of course, families still have to eat, put a roof over their heads, buy clothes and perhaps get gifts for their kids on birthdays and important holidays. So, if they don't have the budget on hand to make these purchases, you may choose to go into debt rather than cut out the necessities, which can turn bad really fast. 'If purchases are for essentials, forgoing them is not an option and debt can result. This can trigger a downward financial spiral, where persistent budget shortfalls lead to rising credit card balances, which in turn eat up more of a household's limited disposable income,' Parsons explained. 'Finally, tariffs are regressive, like sales tax, since individuals pay the same price for a product regardless of their income. This means tariffs carry a heavier burden on those with less income to spare.' It becomes a vicious cycle for low-income families who may end up in a spiral they cannot pull themselves out of and with no end in sight. There's no reason to expect incomes to rise or for tariffs to drop. And housing costs are not going anywhere but up for people in these situations. From there, the drop into homelessness is not far, according to a study by the University of California, San Fransisco. If you can't afford food and you can't pay your bills, you can't pay your rent with your low-income budget, the next natural step is eviction. The effects are serious, life-altering and can be devastating. 'From a legal perspective, tariffs are within the government's authority under the Commerce Clause, a portion of the Constitution that assigns to the federal government the power to regulate commerce, but they can spark lawsuits if misapplied,' said Seann Malloy, founder and managing partner of Malloy Law Offices. 'Low-income and working-class families that simply can't absorb a 15% price hike on imported groceries may be subject to evictions or ruined credit, clogging our courts with cases I frequently litigate,' Malloy added. 'Equal protection challenges could stem from relief programs that exclude some groups. It is important to push for transparent tariff impact assessments and the expansion of legal aid to protect vulnerable clients' The best thing working-class people can do right now is to cut spending as much as possible to live well below their means. It's also a good idea to take on a side gig or hustle that will increase their income, allowing them to start investing in themselves and growing their wealth. This can help create a more stable living situation that will help keep them in their homes and purchasing the necessities for their families. More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard How Much Money Is Needed To Be Considered Middle Class in Every State? Mark Cuban Tells Americans To Stock Up on Consumables as Trump's Tariffs Hit -- Here's What To Buy This article originally appeared on 5 Ways Tariffs May Affect Your Budget If You Earn a Low Income
Yahoo
a day ago
- Business
- Yahoo
5 Ways Tariffs May Affect Your Budget If You Earn a Low Income
With tariffs wavering back and forth, it's critical to know how these changes can affect your budget. Especially if you're in a lower income bracket, even a small hike in prices can negatively impact your entire month's budget by putting more strain on the already expensive prices. Trending Now: Explore Next: Understanding those changes can help you plan accordingly and, ideally, avoid taking too big of a hit. To that end, GOBankingRates spoked to some experts on the economy for insight into what the future might hold regarding the effects of tariffs — below is what they had to say. There was once a time when people thought of imported goods as fine wine, art or high-end furniture. You may import a luxury vehicle. Of course, no one on a tight budget was thinking about these types of luxury imports. But today, virtually anything and everything can be imported and if it's imported, it will have a tariff. This means higher prices and less purchasing power for your budget. Read Next: 'Pretty much all goods manufactured today are to varying degrees important — there is, for example, no car made in the US and entirely of U.S.-origin parts,' said Dr. Brandon Parsons, economist at Pepperdine Graziadio Business School. 'The tariffs that are going to sneak up on lower-income Americans will be the ones on food — meat, fresh fruits and vegetables and specialty food items,' he added. 'And the most hidden tariff impact will be on processed foods that incorporate imported foodstuffs — think tomato sauce made with Mexican or Canadian tomatoes.' Some have assumed in recent months that companies distributing goods will absorb the cost of these tariffs. But nothing could be further from the truth. 'As Walmart and a growing number of retailers have made very clear, the cost of tariffs will be passed along to consumers,' Parsons said. This means you'll have less purchasing power with your budget. reported that only 10 percent of businesses did not intend to pass along any of the tariff costs to their consumers. What this means for the low-income budget, then, is that items people need to buy will now cost significantly more than they used to. Most people living on low incomes are already struggling to make ends meet, often living paycheck to paycheck. These tariffs will make budgeting for basic, everyday necessities hard. 'Another reason is lower-income families will often live paycheck to paycheck and have a smaller (potentially no) cushion to absorb these higher costs. Without the ability to cover the higher costs created by the tariffs, lower-income families will be forced to adjust what they can purchase to a greater extent than their higher-income counterparts,' said Dr. Wayne Winegarden, senior fellow of business and economics at the Free Market Pacific Research Institute and director of PRI's Center for Medical Economics and Innovation. 'Compounding these problems, the recent bout of inflation has created a huge affordability problem that harmed lower-income families to a greater extent than higher-income ones,' Winegarden added. 'The tariffs will worsen the current affordability problem and further destabilize the household budgets of lower-income and working families.' Of course, families still have to eat, put a roof over their heads, buy clothes and perhaps get gifts for their kids on birthdays and important holidays. So, if they don't have the budget on hand to make these purchases, you may choose to go into debt rather than cut out the necessities, which can turn bad really fast. 'If purchases are for essentials, forgoing them is not an option and debt can result. This can trigger a downward financial spiral, where persistent budget shortfalls lead to rising credit card balances, which in turn eat up more of a household's limited disposable income,' Parsons explained. 'Finally, tariffs are regressive, like sales tax, since individuals pay the same price for a product regardless of their income. This means tariffs carry a heavier burden on those with less income to spare.' It becomes a vicious cycle for low-income families who may end up in a spiral they cannot pull themselves out of and with no end in sight. There's no reason to expect incomes to rise or for tariffs to drop. And housing costs are not going anywhere but up for people in these situations. From there, the drop into homelessness is not far, according to a study by the University of California, San Fransisco. If you can't afford food and you can't pay your bills, you can't pay your rent with your low-income budget, the next natural step is eviction. The effects are serious, life-altering and can be devastating. 'From a legal perspective, tariffs are within the government's authority under the Commerce Clause, a portion of the Constitution that assigns to the federal government the power to regulate commerce, but they can spark lawsuits if misapplied,' said Seann Malloy, founder and managing partner of Malloy Law Offices. 'Low-income and working-class families that simply can't absorb a 15% price hike on imported groceries may be subject to evictions or ruined credit, clogging our courts with cases I frequently litigate,' Malloy added. 'Equal protection challenges could stem from relief programs that exclude some groups. It is important to push for transparent tariff impact assessments and the expansion of legal aid to protect vulnerable clients' The best thing working-class people can do right now is to cut spending as much as possible to live well below their means. It's also a good idea to take on a side gig or hustle that will increase their income, allowing them to start investing in themselves and growing their wealth. This can help create a more stable living situation that will help keep them in their homes and purchasing the necessities for their families. More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard Are You Rich or Middle Class? 8 Ways To Tell That Go Beyond Your Paycheck 6 Big Shakeups Coming to Social Security in 2025 This article originally appeared on 5 Ways Tariffs May Affect Your Budget If You Earn a Low Income Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
a day ago
- Business
- Yahoo
5 Ways Tariffs May Affect Your Budget If You Earn a Low Income
With tariffs wavering back and forth, it's critical to know how these changes can affect your budget. Especially if you're in a lower income bracket, even a small hike in prices can negatively impact your entire month's budget by putting more strain on the already expensive prices. Trending Now: Explore Next: Understanding those changes can help you plan accordingly and, ideally, avoid taking too big of a hit. To that end, GOBankingRates spoked to some experts on the economy for insight into what the future might hold regarding the effects of tariffs — below is what they had to say. There was once a time when people thought of imported goods as fine wine, art or high-end furniture. You may import a luxury vehicle. Of course, no one on a tight budget was thinking about these types of luxury imports. But today, virtually anything and everything can be imported and if it's imported, it will have a tariff. This means higher prices and less purchasing power for your budget. Read Next: 'Pretty much all goods manufactured today are to varying degrees important — there is, for example, no car made in the US and entirely of U.S.-origin parts,' said Dr. Brandon Parsons, economist at Pepperdine Graziadio Business School. 'The tariffs that are going to sneak up on lower-income Americans will be the ones on food — meat, fresh fruits and vegetables and specialty food items,' he added. 'And the most hidden tariff impact will be on processed foods that incorporate imported foodstuffs — think tomato sauce made with Mexican or Canadian tomatoes.' Some have assumed in recent months that companies distributing goods will absorb the cost of these tariffs. But nothing could be further from the truth. 'As Walmart and a growing number of retailers have made very clear, the cost of tariffs will be passed along to consumers,' Parsons said. This means you'll have less purchasing power with your budget. reported that only 10 percent of businesses did not intend to pass along any of the tariff costs to their consumers. What this means for the low-income budget, then, is that items people need to buy will now cost significantly more than they used to. Most people living on low incomes are already struggling to make ends meet, often living paycheck to paycheck. These tariffs will make budgeting for basic, everyday necessities hard. 'Another reason is lower-income families will often live paycheck to paycheck and have a smaller (potentially no) cushion to absorb these higher costs. Without the ability to cover the higher costs created by the tariffs, lower-income families will be forced to adjust what they can purchase to a greater extent than their higher-income counterparts,' said Dr. Wayne Winegarden, senior fellow of business and economics at the Free Market Pacific Research Institute and director of PRI's Center for Medical Economics and Innovation. 'Compounding these problems, the recent bout of inflation has created a huge affordability problem that harmed lower-income families to a greater extent than higher-income ones,' Winegarden added. 'The tariffs will worsen the current affordability problem and further destabilize the household budgets of lower-income and working families.' Of course, families still have to eat, put a roof over their heads, buy clothes and perhaps get gifts for their kids on birthdays and important holidays. So, if they don't have the budget on hand to make these purchases, you may choose to go into debt rather than cut out the necessities, which can turn bad really fast. 'If purchases are for essentials, forgoing them is not an option and debt can result. This can trigger a downward financial spiral, where persistent budget shortfalls lead to rising credit card balances, which in turn eat up more of a household's limited disposable income,' Parsons explained. 'Finally, tariffs are regressive, like sales tax, since individuals pay the same price for a product regardless of their income. This means tariffs carry a heavier burden on those with less income to spare.' It becomes a vicious cycle for low-income families who may end up in a spiral they cannot pull themselves out of and with no end in sight. There's no reason to expect incomes to rise or for tariffs to drop. And housing costs are not going anywhere but up for people in these situations. From there, the drop into homelessness is not far, according to a study by the University of California, San Fransisco. If you can't afford food and you can't pay your bills, you can't pay your rent with your low-income budget, the next natural step is eviction. The effects are serious, life-altering and can be devastating. 'From a legal perspective, tariffs are within the government's authority under the Commerce Clause, a portion of the Constitution that assigns to the federal government the power to regulate commerce, but they can spark lawsuits if misapplied,' said Seann Malloy, founder and managing partner of Malloy Law Offices. 'Low-income and working-class families that simply can't absorb a 15% price hike on imported groceries may be subject to evictions or ruined credit, clogging our courts with cases I frequently litigate,' Malloy added. 'Equal protection challenges could stem from relief programs that exclude some groups. It is important to push for transparent tariff impact assessments and the expansion of legal aid to protect vulnerable clients' The best thing working-class people can do right now is to cut spending as much as possible to live well below their means. It's also a good idea to take on a side gig or hustle that will increase their income, allowing them to start investing in themselves and growing their wealth. This can help create a more stable living situation that will help keep them in their homes and purchasing the necessities for their families. More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard These Cars May Seem Expensive, but They Rarely Need Repairs I'm a Retired Boomer: 6 Bills I Canceled This Year That Were a Waste of Money This article originally appeared on 5 Ways Tariffs May Affect Your Budget If You Earn a Low Income 登入存取你的投資組合
Yahoo
04-03-2025
- Business
- Yahoo
Inflation Is Sticking Around — What It Means for the Middle Class in 2025
Americans are increasingly worried about inflation again. Be Aware: Try This: The University of Michigan Index of Consumer Sentiment fell in January, and then plummeted nearly 10% in February. And sure enough, the Consumer Price Index (CPI) inflation reading from the Bureau of Labor Statistics (BLS) showed inflation heating up again in January. The CPI reading ticked back up to an annual reading of 3%. Core inflation ran even hotter, at 3.3%. So much for the hopes that high inflation was behind us. What does that mean for middle class Americans and their wallets? When inflation rises faster than your income, you lose purchasing power. You effectively take a pay cut. That means you need to tighten up your budget and trim your lifestyle. 'Prices are rising most for necessities, so they're tough to avoid,' said Robert Frick, economist at Navy Federal Credit Union. 'We're seeing food, healthcare, auto insurance and shelter costs leading the surge in CPI. Middle-class Americans have already adopted coping strategies for most of these things, such as shopping more at discount retailers.' Look for places you can cut back without making dramatic cuts to your quality of life. Which subscriptions can you cancel? What can you make for yourself rather than paying someone to make for you, such as coffee and lunch? That's the ugly reality of inflation. Read Next: Everyone just assumed interest rates would fall in 2025, because they thought inflation was tamed. Not so fast. Dr. Brandon Parsons, an economist at Pepperdine Graziadio Business School, sees high interest rates sticking around for a while. 'It is unlikely the Federal Reserve will reduce interest rates if inflation remains above 3%.' Likewise, bond markets won't allow yields to fall while they smell high inflation risk. High interest rates make every debt more expensive, but nowhere does that hit middle class Americans harder than their housing costs. For three years now, 30-year mortgage rates have remained over 6% — and often exceeded 7%. That's pushed the cost of homeownership out of reach for many first-time buyers. Compounding the problem, many homeowners feel locked in place by their low fixed interest rates that they borrowed years ago. If they move, they'd have to borrow a new loan at an expensive rate — meaning they'd pay more each month, even for a lesser house. So, many would-be sellers haven't sold, leaving a low inventory of homes for sale. That, too, has made it harder for first-time buyers to enter the housing market. Inflation makes everything more expensive, and cars have been no exception. But that might get even worse if the U.S. enacts tariffs on its largest trading partners. One study by Jefferies, reported by NPR, found that the blanket tariffs on Canada, Mexico and China would add $2,700 to the average vehicle price. And Jefferies performed that study before the Trump administration announced specific tariffs on steel and aluminum — two crucial components for cars. Expect more expensive cars in your future, especially if tariffs become an economic reality. Recessions come and go, but inflation tends to stick around permanently. Joseph Camberato, CEO at National Business Capital, has seen this firsthand. 'Even if inflation slows, prices have already jumped to a new level, and they're not coming back down.' That means you may need more saved for retirement than you think. Your living expenses in retirement will likely cost far more than you pay today, in nominal dollars. So how should you invest for retirement, so your money grows faster than inflation? Some investments simply rise in value right alongside inflation. 'Inflation doesn't necessarily mean lower profits or stock prices,' said Parsons. 'Since the [COVID-19] pandemic, for example, many firms have simply increased their prices to keep their profits and stock prices strong.' Other investments can also keep pace with or exceed inflation, he added. 'Inflation-resistant investments like real estate, gold and Treasury Inflation-Protected Securities (TIPS) can further mitigate inflationary pressures.' Just watch out for bonds and cash held in low-interest accounts. Inflation eats into the real returns of bond interest — and the real value of your cash. Don't want to tighten your budget and lifestyle? Earn more money. That could mean negotiating a raise at your current job or pushing for a promotion. Alternatively, you could switch employers or upgrade your skills and find a new career entirely. For that matter, you could also add a side hustle to earn some extra cash. Whatever you do, don't let inflation rise faster than your income if you want to keep improving your quality of life. More From GOBankingRates This article originally appeared on Inflation Is Sticking Around — What It Means for the Middle Class in 2025 Sign in to access your portfolio
