Social IssuesAPR 5, 2022

"Easy Peasy": Economists Recommend You Should Start Making An Extra $5200 Due To Rising Costs, Here Are The Best Reactions From The Internet

Austėja Akavickaitė and Liucija Adomaite

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It’s not just you who recently realized you can barely afford a regular frappe with almond milk. Or a lemon Perrier six pack that instantly makes you feel more French. But hey, we can totally live without that, right? But the prices of basic goods are rising at the pace of a hadron collider (gas, anyone?!) and at this point, it’s just a question of weeks if not days to a generously downsized grocery bag.

$5200. That’s how much money we all need to “add to our budget” a year to make up for the inflation, according to Bloomberg economists. About $2,200 of that inflation tax will come from pricier food and energy, they added. And that, ladies and gents, boils down to an extra $433 per month on the same goods and services as last year.

As you can suspect, the headline went viral on social media and in no time, sarcastic reactions flooded Twitter. “Should that come out of my caviar budget, or should I downsize my yacht?” tweeted David Kaib. Another person suggested “making the third home a rental property.”

Meanwhile, another set of news broke that corporations reported record profits, making 2021 their best year since 1950. So I just leave the stage to people on Twitter from this point.

Bloomberg economists reported that Americans should budget an extra $5,200 this year to cover rising prices, making basically everyone raise their eyebrows

Image credits: Alexander Mils

INSIDER quoted Bloomberg economists Andrew Husby and Anna Wong who said that in a Tuesday article that went viral on Twitter

Bloomberg economists Andrew Husby and Anna Wong calculated that the red-hot inflation expected to last throughout the year will leave the average US household spending $5,200 more compared to the year prior. They commented: "Accelerated depletion of savings will increase the urgency for those staying on the sidelines to join the labor force, and the resulting increase in labor supply will likely dampen wage growth," they said.

Image credits: JoshuaPotash

According to Business Insider, “as people spend their built-up savings, they'll need to go back to work, and employers won't have to pay as much to lure them back.”

But while many American households are already worrying about how they’re going to afford basic things, like fuel, heating and groceries throughout the inflation, major U.S. corporations can’t relate whatsoever. More so, they seem to be riding out the fiercest inflation in 40 years like a walk in the park.

Simultaneously, another news headline broke saying that US corporations saw record profits and that 2021 was the best year for them since 1950

CBSNews pointed out recently that while CEOs spent much of 2021 pointing to the impact of rising wages, pricier raw materials and other ballooning expenses on their companies' performance, new data from the Commerce Department show that corporate profit margins are the largest they've been in 70 years.

Isabella Weber, a professor of economics at the University of Massachusetts Amherst, told in an interview for NPR that companies always want to maximize profits. “In the current context, they suddenly cannot deliver as much anymore as they used to. And this creates an opening where they can say, well, we are facing increasing costs. We are facing all these issues. So we can explain to our customers that we are raising our prices,” she said. However, no one knows exactly how much these prices should be increased.

This didn't sit well with people on Twitter who wasted no time sharing some very sarcastic reactions

Image credits: Public_Citizen

Image credits: Nicola Barts

Moreover, Weber argues that as a matter of fact, “what we have seen is that profits are skyrocketing, which means that companies have increased prices by more than cost. In the earnings reports, companies have bragged about how they have managed to be ahead of the inflation curve, how they have managed to jack up prices more than their costs and as a result have delivered these record profits.”