The savings rate currently sits at 14.9 percent. While it’s been slightly higher than this over the course of the past year, compared to most of recent history, we are in unchartered waters. Of course, with about 70 percent of Americans living paycheck-to-paycheck, much of this savings is concentrated in the upper-middle-class. Nonetheless, the amount of money sitting in bank accounts bodes well for strong consumer spending going forward. And still another factor influencing inflation is the job market. An underwhelming number of new jobs have been added to the economy over the past two months. Because of the optimism surrounding the reopening, economists were initially expecting that nearly 1.7 million jobs would be added in April and May.
Instead, there were “only” 837,000 new jobs. Despite the relatively low number of new hires, there are almost 9.3 million job openings in the U.S. This is a record, which suggests employers are having a hard time finding workers. To compensate, employers might have to entice potential workers with higher wages. And, subsequently, employers might then attempt to pass on those higher costs to you. One reason that businesses could be having a tough time finding workers is that the federal government decided to increase weekly unemployment benefits by $300 per week, which some people believe is incentivizing people not to seek work. As a result, there are currently 25 states opting to end this extra assistance early. For example, Texas, Florida, Ohio, and Georgia will terminate these benefits on June 26. (The states not ending the program early will see these benefits expire in early September.) Either way, this should not be a long-term problem. Of course, there are certainly people not working for other reasons, such as fear of the virus and child-care logistics. However, as vaccination levels rise, people will likely become more comfortable finding a job, and as more schools reopen, this should help solve the child-care dilemma.
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