PHOENIX — We’re making more money, spending more money, and apparently saving more money.
That’s according to a recent report from the U.S. Bureau of Economic Analysis (BEA).
That report shows the Fed's preferred inflation gauge cooled notably, showing a rise of 0.3% in February -- which is less than expected.
ABC15’s Data Analyst Garret Archer says this is seemingly positive.
“We see that goods are dropping dramatically by five points since June,” he added.
Archer says that is a big plus, adding it is a sign the Federal Reserve rate hikes are starting to cool inflation. Though, there is a caveat.
“We’re seeing service inflation. So service is actually inflated to a higher point than it has been in 35 years right now, and three-quarters of what consumers spend their money on is services,” he added.
Services are exactly what they sound like-- grabbing an Uber or even getting your hair done.
Wanda Jordon can relate.
“My kids paid for my hair, and it was $150,” she told ABC15.
She says bills for services are getting outright ridiculous.
“That’s what it is,” Jordon said.
“And so that’s gone up too, right?” asked ABC15.
“Yes. It’s expensive,” Jordon responded.
That is why Jordon budgets and while she doesn’t save, her son Jonathan does.
Economy expert Luis Cordova with Rounds Consulting Group says that’s a good idea.
“We are likely to enter a recession next year so it’s a good time to prepare by saving,” said Cordova.
The U.S. Bureau of Economic Analysis also shows people made more money in February.
Cordova says, there’s a reason for that.
“Income is still going up because we are still in an expansion period, so there’s still a lot of job availability,” Cordova told ABC15.
Though, both experts say it's important to keep an eye on the Federal Reserve's next move.
“Their goal is to get inflation down to 2% which is not likely going to happen until next year, so it still leaves room for them to raise rates further,” said Cordova.
Archer says if the Fed raises rates, the outcome will not be favorable to consumers.
“That does eat into savings because that impacts APR. It will indirectly impact things like auto loans and mortgages,” Archer told ABC15.
