Tag Archives: inflation

Fiscal year end squeeze

1 Reply

Globally, we’ve seen jumps in prices in the last year that are unsustainable. It seems like everything in the grocery store is more expensive, and prices seem to continue to creep up. The impact must be felt around the world, and cost rises like this unjustly affect people below and near the poverty line more than they affect anyone else.

Now throw on top of this the loss of a job for the main breadwinner in the family, and the results are devastating. Unfortunately a lot of people are about to lose their jobs.

We are reaching, in the next couple months, the fiscal year end for a lot of large corporations, and two related patterns we’ve seen a lot of recently are going to repeat.

  1. Profits over people
  2. Massive layoffs

Corporations care about pleasing shareholders and maintaining stock value over caring for the people who work for them. This is the ugly side of capitalism. Eliminate thousands of salaries and suddenly the balance sheet proves to be more profitable. Never mind that these are people’s careers and livelihood that are being cut short. And never mind about loyalty to the company.

Cut. Save. Profit. And in a year, repeat.

And we aren’t taking about a few dozen jobs, we are talking about tens and cumulatively hundreds of thousands of jobs worldwide. We are talking about people with mortgages, people losing health care, people who were already living paycheque to paycheque, suddenly jobless. People who thought they were going to be ok, suddenly seeking a job in a challenging market where thousands like them are in the same situation.

Beyond purely meeting shareholder targets, AI and robotics are also taking jobs away. Companies are choosing to use the former salaries of employees to buy chips and memory storage. Manufacturers are replacing employees with robots that don’t take breaks or sick leave, and which don’t need to end their shift after 8 hours. On top of shareholder pressures, there are pressures to eliminate jobs and have the AI Revolution transform the workplace more dramatically than the Industrial Revolution did.

I think this year we are going to see this happen at an alarming scale. The irony is, the large scale layoffs that I see about to happen, added to soaring prices, are going to drastically affect the spending of consumers who buy the products these large companies need purchased. However, many of these billion dollar companies are circumventing this too, by committing billions of dollars to purchase goods and services from each other, again inflating their perceived profits for shareholders.

All this to say that I see a lot of short term financial pain for a significant number of people in the coming months. I’m predicting the fiscal year end squeeze is going to be a hardship like none we’ve seen before, and a lot of people, a lot of families, are going to struggle as a result.

Price hikes

Everywhere I turn I’m surprised by the price of things. Groceries, restaurants, parking, shoes, alcohol, no matter what I’m looking to buy, prices seem significantly higher than just a couple years ago. It’s not subtle, it’s very noticeable.

I wonder if the percentage of people living below the poverty line has increased? How are lower-middle class families doing? How many houses have been sold due to interest rates being too high? How many people are commuting from farther away from work than they hoped because rentals in cities are too high?

How are people making minimum wage making ends meet? How many kids in their 20’s and even 30’s are living at home with their parents? How many are renting with no hope of coming up with a deposit to buy a house?

Prices don’t seem to go down either, even when the economy and interest rates lower, prices stay hiked up… they don’t increase as fast, but they also don’t lower. New lows are set and we are forced to settle with the new hikes as the new normal.

It doesn’t seem sustainable.

Money matters

I remember in Junior High school when I could buy a bag of potato chips for 25 cents. Then there was a jump in price, with a smaller bag being sold for 35 cents. That was a big jump and it took a while before paying more for less became the norm.

There are distinct times in my life when I recall these kinds of jumps. Like when it was crazy to see gas be over 50 cents a litre, then the price jumped above 70 cents and when it dipped back down it never went below 55 cents again. Give us gas at 71.9 cents a litre for 2 months and suddenly we are quite happy to see 55.9, like it’s a bargain price. Now I’m checking my tank to see how much gas I have when the price is under $1.65, because that’s too good of a price to pass up.

I get that prices need to go up, but what I don’t understand is how this is happening while simultaneously banks, oil companies, and grocery chains are recording record profits. It’s literally a case of gouging the consumer and blaming inflation.

Rants aside, I’m up at Whistler with my family, my mom is visiting and has never been up here. We are staying in a wonderful hotel, a surprise gift from a friend, and my kids can’t get over the way people spend their money. Here, room service for 2 would be a fancy meal for all 5 of us… and no we didn’t order any, we just looked at the menu.

A day of skiing for our family, with 2 parents and 2 adult kids would be $1,200, and if the kids were under 19, $1,100, and under 12 would be $900. Most families are here for 3-4 days of skiing. Many have flights to pay for, and hotels here are not cheap!

But for some people, spending $15,000 to $25,000 for a vacation is… normal. For others that’s a significant portion of their yearly salary and out of the question.

It’s funny, you always hear, ‘money can’t buy happiness,’ and while I agree with that, there is something affluence does buy, it buys a sense of freedom. Money matters because when you have a lot of it, you don’t have to think as much about your spending. You want something? Buy it. You need something done quickly? Pay someone to do it for you? However, when you don’t have the freedom to buy whatever you want, when the cost is prohibitive, money really matters.

Prices have jumped significantly since Covid. There are more people struggling to make ends meet. There are more people choosing not to go out for dinner because the cost is just too excessive for a family. There are people who used to ski at Whistler who have been priced out of that option. There are many more people who don’t make a purchase without thinking of the cost. They don’t have the freedom to spend without thinking of the consequences of a purchase.

That’s what affluence buys, it buys free buying power that doesn’t feel nearly as free for less affluent people. Monet matters less as you get more. I’m not sure what the sweet spot is, where the transition happens, and I’m not sure I ever will. I just know I’m at one of those price jump times where I’m going to need to adjust to the price jumps wherever I look… I’m just not sure I’ll be adjusting to these new price ‘lows’ any time soon. It’s a time where money matters for a lot of us.

Prices up

I don’t know how some families do it? How do they manage the inflation of prices we’ve had? My wife and I both make good salaries, and while we feel the crunch of significant increases in the price of groceries, we can manage. But a single income family with a job that is financially less rewarding than our double salary household has to be struggling right now.

Add to that the increase in interest rates over the last few years and looking at how much monthly that has gone be up, and there have to be families in financial trouble. We’ve reached a point in Canada where many conveniences have become luxuries. Foods and meals that used to be staples are becoming special treats. I saw a video clip from a European country where inviting friends over for dinner now routinely comes with a bill, their equivalent of a direct deposit request or Venmo. ‘We are happy to have you over, this is what it cost us and this is your share’.

I could never see myself wanting to do that, but if I was in a community of young adults who liked to party and not everyone could host regularly, I could see this as a thing… friends understanding that the hosts are put out more than anyone and so helping them out. While it makes financial sense, I see it as an undermining of the friendship relationship. It puts a price on friendship. Imagine going to party and getting a different bill depending on if you drank more or went for seconds and ate more. That would feel very awkward to me on either end of the transaction.

But it seems that’s how some young people are coping with the inflation of everything around them. They want to be social but don’t have the financial means to do so regularly without splitting the bill. To me, this is an example where high prices are not just affecting our finances, but also our sense of community. It’s a sign that our greater society are coping and not thriving.

At least people are still trying to get together… and sharing the cost is much better than being isolated. It’s just sad that this is, for a growing number of people, necessary.