CLEVELAND — 2022’s financial concerns are following many Northeast Ohioans into 2023. Economic indicators show record inflation is cooling, but the price of everyday purchases remains high.
That was evidenced Monday at the Mega Church Resource Center in Cleveland’s Clark-Fulton neighborhood. The food and clothing charity arm of the nearby Scranton Road church was scheduled to be closed in observance of the New Year, but one church member called and requested emergency help.
“I thought I was going to have enough money – and I didn’t – to go grocery shopping,” explained member Michael Covington. “So I was like, ‘Hey elder, are you [open]?’ He said, ‘We’re not really, but if you come down here we’ll help you out.’ I was like, ‘Thank you so much’ because I needed it.”
Church elder Gerald Manning planned to give Covington several bags of groceries and return home to his family, but at least four more people knocked on the Resource Center door seeking assistance in the first hour he was there.
“Anybody that wants to come here and get food and clothes, we let them come,” Manning said.
Covington and others at the Resource Center Monday told News 5 their normal monthly budgets aren’t stretching as far as they once did.
“I used to survive off of like $60 for a whole month. Now I’m spending $180 and it’s barely lasting me 3 weeks,” Covington said.
Manning added, “The prices are up, gas is up, food is up. So the need is there.”
The latest Consumer Price Index (CPI) shows Americans are paying more than 7% higher prices for their average goods and services than the same time last year. The figure is down from a record 9.1% in June. But groceries, in particular, are up 12% from the previous year.
“There’s optimism that inflation has perhaps peaked and is on its way down, but we don’t know that for sure,” said Michael Goldberg, an Associate Professor of Design and Innovation at Case Western Reserve University’s Weatherhead School of Management.
He explained global events, like the war in Ukraine, COVID restrictions in China or other unexpected economic shocks will continue to affect the prices of food and energy in the U.S. A bright spot stateside is that pandemic-related supply chain challenges appear to be improving.
“We're seeing some alleviation there, but we may continue to see high prices for things like energy, which can spike based on global demand and also grocery and food prices,” Goldberg said.
Economists believe the Federal Reserve’s seven consecutive rate hikes in 2022 contributed to slowing inflation. But some worry the higher borrowing rates will stall the economy too quickly and may lead to a recession.
“When there’s not growth and there’s high cost of capital, companies aren’t expanding,” Goldberg explained. “So there is some doom and gloom, in terms of economists looking at the economy, and seeing all of these efforts to fight inflation, what this might mean for the overall US economy.”
He said investors and those looking to make large purchases in 2023 will feel an even tighter pinch. At the current interest rate, a person with a credit card balance of $5,000 is now paying an extra $1,646 in interest. If you're looking to take out a fixed 30-year, $300,000 mortgage, you will now spend at least $500 more every month than you would have paid taking out the same loan at the start of 2022.
Americans who were already struggling with high prices will likely see more of the same in 2023. Manning and Covington are already bracing for the needs they expect in the coming months.
“I expect more of that to happen,” said Manning.
Covington added, “Unfortunately it’s a lot of people, a lot more people than me struggling.”
The Central Bank will likely issue its next interest rate hike in early February.
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