The holidays are for most a happy time, a time spent with family after weeks of shopping for gifts and food. But those good times come with a price tag, one that is still a good 7% higher than last year. That has shoppers like Sam Murphy of Cleveland keeping a closer eye on the spending.
"We're trying to keep it small this year," Murphy said. "Trying to budget more and figure out what we're going to do."
Many choose to put their happiness on their credit cards while hoping to pay it off in the new year, but that carries its own greater challenges this year. The Federal Reserve Wednesday raised interest rates one half of a percent, the seventh increase this year alone. That's pushed the Fed's main interest rate to its highest level in 15 years. So what does that mean for you? Well if you're carrying a credit card balance of $5,000, those seven rate hikes mean you're 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 the year.
And if you're hoping for a break in 2023? Federal Reserve Chair Jerome Powell said Wednesday that's not likely. "We understand the hardship that high inflation is causing," he said. "It will take substantially more evidence to give confidence that inflation is on a sustained downward path."
A man with the ear of the Fed Chair is Sen. Sherrod Brown, chair of the Senate Banking and Housing Committee. He told me he reminds Powell "he has two functions, two responsibilities, one is to keep inflation down the other is to keep the economy strong. And we’ve had good hiring numbers and we need to continue to focus on that.”
What Congress needs to do, Brown said, is go after the businesses that profited from inflation that in his words abused the public trust. That won’t impact things in the short term, though, and those higher interest rates are likely to impact big-ticket purchases like vehicles.
That's not a factor for Jasmine Padilla of Cleveland. With her kids grown, the money she used to spend on their Christmas gifts went into an early gift for her.
"God blessed us this year with this beautiful car right here so we're blessed with that because of my children are grown now so we saved the money into the car," she said.
