The GOP’s “Big, Beautiful Bill” is even more beautiful if you make $1 million or more a year.
The recently passed House Republican tax and spending package, dubbed the “One Big Beautiful Bill Act,” reveals a stark disparity in who stands to gain from its provisions. Analysis from multiple economic experts shows the legislation overwhelmingly benefits America’s wealthiest households while potentially harming those with the lowest incomes. The Congressional Budget Office’s nonpartisan…
Higher borrowing costs for consumers could have negative results.
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Inflation has been hammering consumers since the latter part of 2021. And over the past year and a half, many people have been forced to charge up a storm on their credit cards and raid their savings accounts just to keep up with rising costs.
The Federal Reserve is really eager to see the problem of inflation go away. And to that end, it’s been aggressively hiking up interest rates this year in an effort to cause a pullback in consumer spending.
To be clear, the Fed doesn’t set consumer borrowing rates, like auto loan and mortgage rates. Rather, it oversees the federal funds rate, which is what banks charge each other for short-term borrowing.
But when the Fed raises its benchmark rate, consumer borrowing rates tend to follow suit. And so these days, consumers are looking at higher interest rates on everything from personal loans to credit card balances.
Now the goal in making borrowing more expensive is to drive a modest decline in spending so that the supply of goods and services can catch up to demand. Once that happens, it should help bring inflation down to a more moderate level.
But the Fed is taking a big risk. If consumer spending declines drastically, it could be enough to spur a full-blown recession.
Meanwhile, in November, the Consumer Price Index, which measures changes in the cost of consumer goods, showed a slowdown in inflation compared to earlier on in the year. In spite of that, the Fed announced a 0.50% interest rate hike on Dec. 14. And while that won’t lead to an instant recession, it could bring us closer.
So far, higher borrowing costs don’t seem to be slowing consumers down to too much of an extreme. But some experts think a big reason we haven’t seen a notable decline in spending is that Americans still have leftover stimulus funds to spend from 2020 and 2021. Once that money runs out, spending could drop to a large degree.
If that happens, it could be enough to cause a recession to hit in 2023. And at that point, the topic of stimulus aid might re-enter the mix.
Lawmakers have previously relied on stimulus aid to bust the economy of a slump. And so if things get really bad for the economy in 2023, Americans could see another round of stimulus checks land in their bank accounts.
Although a 2023 recession could lead to a round of stimulus funding, the last batch of stimulus aid given out was met with a lot of criticism. In fact, many experts believe that it was lawmakers’ generous stimulus policies in 2020 and 2021 that led to such rampant inflation in the first place.
If a recession strikes in 2023, stimulus checks could be back on the table. But they may be a lot more limited in size and scope than in previous years. And so all told, stimulus aid is not something the typical consumer should rely on in the near term — even if economic conditions decline.
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Trust me when I say I’m not celebrating.
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For many people, late November is one of the most celebrated times of the year. It’s when the holiday season officially kicks into gear, when neighborhoods light up with shining decor, and when people are generally just in more of a giving spirit.
But in my neighborhood, late November wasn’t such a great time of the year for a lot of homeowners. That’s because we got our annual property assessment cards in the mail right around Thanksgiving time. And many of us saw numbers we weren’t happy with.
I live in a part of the country where home values are higher than average. As an example, a $600,000 home in my neighborhood isn’t particularly large or updated — it’s really your typical three- or maybe four-bedroom home. In another part of the country, $600,000 might buy you a mansion on an acre of land.
Because home prices are up on a national level and home values in my area are higher to begin with, a lot of people in my neighborhood saw their assessments increase by $100,000 or more this past November. And I was in that very boat.
Now you’d think that a higher home value would be something homeowners would celebrate. And some people may be happy about those higher numbers. Here’s why I’m not.
If I were looking to sell my home, then I’d definitely be thrilled with a higher assessment, because it could easily make the case for a higher asking price. But I’m not selling my home.
First of all, I’m content where I am. And also, selling my home could mean having to yank my kids out of their school district and off of their sports teams. That’s not something I’m eager to do.
Plus, home prices are up so much right now that even if I were motivated to move, and even if I were to sell my house at a nice profit, what I’d gain there, I’d end up spending on another overpriced home. Oh, and since mortgage rates are up, any new home would probably end up costing me a lot more — even with a large down payment.
Not only am I not planning to sell my home any time soon, but I’m also not planning to tap my home equity for a loan or line of credit. So all told, the fact that my house is now worth a lot more doesn’t benefit me in any way.
Property taxes are calculated by taking the assessed value of your home and multiplying it by your local tax rate. Now that my home is worth more money, my property tax bill could skyrocket unless my local tax rate goes down.
Now chances are, that rate will go down. A lot of homes in my area are up by $100,000 or more. And the tax rate in my town is high. But my township can’t easily get away with jacking everyone’s taxes up by $1,000 or more in the next year because it only needs a certain amount of money to meet its budgetary needs, so something is apt to give.
But all told, I’m pretty sure I’ll be looking at some sort of property tax hike next year — even if it’s not a huge one. And since I already pay a lot in taxes, that’s not ideal.
All told, a higher home value isn’t something I’m thrilled about. If I were looking to sell my home or borrow against its equity, I’d feel differently. But for now, all I really have is a higher number on a piece of paper — and the stress of a looming property tax hike hanging over my head.
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The warehouse club giant is making good on its pledge to offer customers great value.
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It’s hardly a secret that inflation has been hurting consumers since the latter part of 2021. And these days, pretty much everyone’s been racking up higher credit card bills in the course of feeding their families.
But some of the items you normally buy at the supermarket may not be costing more. Rather, it may be that their prices are holding steady, but you’re actually getting less product in return. It’s a concept known as shrinkflation, and it’s a sneaky tactic that causes consumers to lose money without even realizing it.
Let’s say you normally buy a 16-ounce box of pasta for $1.19. You might continue to see that pasta available for $1.19. But if you look at the box more closely, you may notice that you’re now only getting 12 or 14 ounces of pasta, not the 16 you originally got to enjoy.
Unfortunately, shrinkflation is pretty rampant these days. And the worst thing about it is that many consumers don’t even know they’re being taken advantage of.
But one retailer is bucking the shrinkflation trend. And budget-conscious consumers may want to spend their money there during these trying economic times.
Costco is known for its bulk and large-sized products. But for the most part, Costco isn’t offering up smaller versions of its signature Kirkland products in an effort to trick consumers.
If you pay a visit to your local Costco, you’re likely to find that the giant muffins you enjoy are still, well, almost ridiculously large. And Costco’s Kirkland-branded snacks, chips, and pantry essentials will still keep you well-fed for weeks.
Now this isn’t to say that Costco hasn’t raised its prices since mid-2021. While prices vary by location, many consumers are seeing an increase in the cost of certain items.
But that’s less problematic than shrinkflation. The reason? It’s more obvious. And it puts consumers in a strong position to make informed decisions about their spending.
Someone who buys a 12-pack of Costco muffins every other week for $8.99 is apt to notice if the cost rises to $9.99. They’re less apt to notice if they’re getting fewer ounces of product. But at that point, someone in that boat can decide whether $9.99 fits into their grocery budget or not.
Many people who maintain Costco memberships do so for years, and for good reason. The warehouse club giant prides itself on offering great value, and that means not pulling a fast one on customers by quietly reducing the size of its products.
Plus, Costco does a great job of standing behind its products. You can return almost anything you’re not satisfied with — even opened food. And for that reason, shopping there is really a pretty low-risk proposition, financially speaking.
If you’re on the fence about keeping your Costco membership in the face of rising costs due to inflation, consider the fact that your local warehouse club is probably one place where you won’t have to worry about shrinkflation. It’s hard to say the same thing about most grocery stores these days.
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Free items can be yours if you’re strategic about how you shop.
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Shopping for essentials like toothpaste and shampoo isn’t always a fun prospect — especially if there are other things you’d rather be putting on your credit cards than these boring personal care items.
The good news is, there are often deals to be had on this type of purchase if you know how to shop strategically. CVS is one place where you can find bargains and, in some cases, it may even be possible to get totally free items at the pharmacy. Here’s how.
It’s possible to get totally free items at CVS because of the way the store operates its sales.
See, CVS allows you to use store coupons that it provides. If you join the company’s ExtraCare program, there are coupon centers in store that you can use to print deals you’re eligible for immediately. You just scan your ExtraCare card at the little in-store kiosk or enter your telephone number to get coupons printed out for you.
CVS also accepts manufacturers coupons on top of these in-store coupons. That means you can stack your coupons, using both the ones that the pharmacy provided as well as the ones the manufacturer offers.
In some cases, especially if items go on sale, stacking these coupons together can make products free or allow you to buy them for pennies on the dollar. For example, if a tube of toothpaste costs $2 and you get a $1 coupon from CVS and a $1 coupon for the toothpaste from the manufacturer, you end up paying absolutely nothing to buy it.
As if that wasn’t good enough, CVS also enables you to earn ExtraBucks for certain purchases. These are essentially “CVS currency” that you can spend on almost anything in the store. If you can buy an item that earns you ExtraBucks with a manufacturer coupon and a store coupon, you can sometimes end up actually getting paid to purchase it.
Figuring out how to get the best bargains at CVS can sometimes be a challenge since you may not be aware of what coupons you can combine. The best option is to look carefully at the store flyer, look for sales, and then check to see what coupons are available from manufacturers. You can check the manufacturer website or there are sites online that sell coupons from the Sunday paper (which are often the best ones to combine with store deals).
There are also online websites, such as SlickDeals, which have forums dedicated to identifying the best drugstore deals each week. You can check out these forums to see what coupons and ExtraCare promotions you can combine to score free items.
If you can save money on purchases from CVS for personal care items ranging from toothpaste to toilet paper to razors, this can help you cut your grocery budget so you can use your cash for other goals. It’s well worth a little bit of effort in order to make that happen, so give this technique a try.
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