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In a recession, everyone feels the pinch. One of the worst hits is the cost of living continuing to increase while many are losing their jobs and homes. Without any extra income (or even a complete and sudden loss of income) it is difficult to pay for goods and services that are the same as they were a year ago, but still cost more.

Certain monthly bills, such as telephone or cable bills, continue to rise. However, these services can be seen as an expense that in unnecessary and are often the first to go when it comes time to cut costs.

However, bills like electricity and gas are almost necessary. Over the winter, some who have seen very hard times were freezing to death. I can imagine it will be worse this year versus years in the past, this summer many people will likely have heat strokes in their own homes.

In light of the current economic crisis, some of these companies may want to consider measures to help their customers get through times when they have a hard time making ends meet.
Other than monthly bills, consumer goods are seeing a rise in prices. More and more every month, consumers have to pay more for the same amount of an item and sometimes the same price for less. In February 2009, the consumer prices index (CPI) rose 0.4 percent, the highest rise in prices since July when gas was over $4.00 a gallon and the CPI rose by 0.7 percent.

The reason the CPI rose 0.4 percent while unemployment rose to the highest levels in nearly a quarter century was due to the increase in oil prices (yet again).

College tuition is another key player in inflation. Although I don’t have any exact numbers to back it up, while I have been in college (since August 2004), I have paid an average of 10% more every year onto my already (what I think is) outrageous tuition. Here’s an interesting fact, this year tuition and admissions at my school are going up but classroom spending and faculty numbers are falling.

On the other side, while lower prices sound like a good idea, the decrease in prices can actually make a recession worse by:

• Lowering wages – When prices of items decrease, wages also decrease as employers attempt to cut costs.

• Layoffs – Employers who are not receiving the same income will begin to lay off workers as they are unable to keep them on payroll.

• Lowering home and stock prices.

As you can see, either side of the argument has its fair share of points that need to be considered. However, I feel as though raising prices, versus keeping them steady through times like these, can be seen more as “kicking them when they’re down” rather than actually helping the economy. I also find that anyone would be hard pressed to find an average consumer that knows the “other side” to rising prices. Most consumers just feel the pinch on their own wallets, and I can say that I’m really no different.

Jeremy

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