Rising Gas Prices & Inflation Force Coloradans To Weigh Essentials
LAKEWOOD, Colo. (CBS4) - At the gas station, the tank doesn't often get filled lately when Katie Orecchio visits the pumps. It wasn't on Friday.
"Can't go out as much. Can't go see family as much. This is my sister. Can't see her as much as I want to," she said as the two of them looked at the numbers rise.
Archer Craddock's fill up of his Jeep reached more than $90. He modified a recent trip.
"We had to invite a whole bunch more people just to be able to split the cost of gas and food." Orecchio works in education and money is tight. She's doing different things to afford the cost of living. "So we're at food banks. Going shopping at our parents' house. Anywhere we can."
People are doing different things as costs rise.
"We call it substitution effect, and the income effect," said Dr. Kishore Kulkarni, a distinguished professor of economics at Metropolitan State University of Denver. "Because if we were eating steak, we'll probably go for hamburger now." There are a lot of new choices, including things like health care.
"Let's say you opt out for a doctor's visit. You cannot put out off a dentist's visit," said Kulkarni.
The use of credit cards is rising. Statistics had shown that people were paying down credit card balances earlier in the pandemic. Now the use of credit is rising.
"You know plan out your weeks wisely and your checks wisely," said Jessica Vigil, who has five kids in her home. "It's not filled every time," she said about her gas tank.
The origins of inflation are a mixture of things notes Kulkarni.
"In last two years the money supply has been pumped in the U.S. economy by as much as 400% which is unprecedented, unheard of for the Federal Reserve System."
That is first in the list of things to be upset about.
"You can definitely blame the war (in Ukraine), and number three is that we can blame a little bit on the pandemic too."
Increased government spending is one thing, another is how production backed off during the pandemic, then was caught way behind when the demand for goods rose, leading to inflation. As we cannot pay the cost, we consume less, or things that cost relatively less.
"We move from a large house to a small house. From small house to an apartment. Large apartment, then a small apartment."
The longer term danger, especially if the money supply is not tightened, says Kulkarni, is recession.
"Because higher prices of all kinds create higher cost of production, and higher cost of production makes producers produce less. And less production means higher unemployment." Continuation of the war in Ukraine is likely to keep oil and gas prices high and add fuel to the fire. "Unfortunately it is not a rosy picture. Which probably is going to get worse."
As she pumped gas following a trip to the grocery store for fewer groceries, Angela DeLuca said they were going to limit their Friday night. "I would have gotten the same amount of groceries for about $50 less a few months ago… no, I'm not going out."