By most measurements, Oregon’s economy is thriving.
The state rallied from COVID-19 shutdowns like a grounded teenager set free on a Friday night. Almost everybody has a job (unemployment is at 4.3%). Those jobs pay more (wages rose 17% since the start of the pandemic). Josh Lehner, a state economist, put it simply last month: “Today, households are flush with cash and rising wealth.”
So why don’t you feel rich?
Because a dollar doesn’t buy what it used to.
The nation is dealing with its worst period of inflation since the 1970s. The resulting consumer frustration threatens to sink the Biden presidency, submarine Oregon’s economic rebound, and cancel your summer vacation.
So it’s time you got a handle on it.
First things first: What exactly is inflation? It’s the decline in purchasing power of a currency over time. Say you went to Fred Meyer a year ago and bought a six-pack of Session Premium Lager and a bag of Rold Gold pretzels, and it cost you $10.50. You go back now and it costs you $12.29. That’s 17% inflation. If you haven’t had a raise in a year, it hurts.
There are three kinds of inflation, and in the past two years, we’ve seen at least two, and maybe three.
The first is called “demand-pull” inflation, and it happens when the supply of money jumps, but the capacity to make stuff doesn’t.
That’s exactly what happened during the pandemic. The U.S. government flooded the country with $6 trillion in aid, but no new foundries opened up to make the dumbbells you needed to stay fit while the gym was closed, or the pavers you coveted for your COVID-safe outdoor patio.
Next came “cost-push” inflation. The price of oil rose as Vladimir Putin threatened to invade Ukraine, and it spiked when he did, making life miserable if you drive anything bigger than a Honda Fit. The price of oil has soared 41% since Feb. 24, amid concern that Western governments will boycott oil from Russia, the world’s third-largest producer.
Finally, there’s “built-in” inflation, the most subtle but significant kind. It happens when workers expect prices to keep going up, so they, in turn, keep asking for higher wages to maintain their standard of living.
These days, it’s hard to find a carne asada burrito in Portland for under $10. But it seems like they were $7 just a year ago, right? So, if past is prologue, they’ll probably be $11 in six months, and you’d be a chump to work for the same wage then as you do now.
“In order for you to get a $6 sandwich delivered to your house, somebody’s probably suffering somewhere in there, you know?” says Ann Garcia, a Portland fiduciary financial adviser. “Somebody’s being taken advantage of to get that. It’s quite possible that some of these services that we’ve come to rely on the last five years are going to be a little harder to come by.”
Suddenly, spending requires some study. In the following pages, we’ve provided CliffsNotes. We found the lowest prices on some of the groceries that keep getting more costly. We asked a gas station owner to predict Putin’s impact on petrol and quizzed financial planner Garcia on which major purchases should wait. And naturally, we’ll tell you whether bitcoin is the silver bullet (spoiler: It isn’t, but the story’s here).
We can’t stop prices from rising. But we can help you navigate the rise. After all, this newspaper is still free.