News23ABC In-Depth


Tips on how to save money amid inflation

Posted: 5:04 PM, Oct 28, 2021
Updated: 2021-10-28 21:22:34-04

(KERO) — Reports are showing the U.S. economy is slowing down making it the weakest expansion since the pandemic recovery began. Numbers from the Commerce Department show that the economy slowed down during the summer to a two-percent annual growth rate.

A big part of that slowdown comes from the number of goods and services the country is exporting. The country's Gross Domestic Product declined by more than six percent from July to September.

What Is Gross Domestic Product (GDP)?

Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. As a broad measure of overall domestic production, it functions as a comprehensive scorecard of a given country’s economic health.

> Gross domestic product (GDP) is the monetary value of all finished goods and services made within a country during a specific period.

> GDP provides an economic snapshot of a country, used to estimate the size of an economy and growth rate.

> GDP can be calculated in three ways, using expenditures, production, or incomes. It can be adjusted for inflation and population to provide deeper insights.

>Though it has limitations, GDP is a key tool to guide policy-makers, investors, and businesses in strategic decision-making.

But, economists are optimistic that the economy will bounce back during the last quarter of the year as COVID cases could decline and people spend more during the holiday seasons.

But how does this impact our daily lives?

You may have noticed you're spending more money this year on the same products than you were a year ago. That's because inflation and supply chain disruptions are causing price tags for just about anything to increase.

What is Inflation?

Inflation is the decline of purchasing power of a given currency over time. A quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price level of a basket of selected goods and services in an economy over some period of time. The rise in the general level of prices, often expressed as a percentage, means that a unit of currency effectively buys less than it did in prior periods.

What is Causing Inflation?

According to the Associated Press, Federal Reserve Chair Jerome Powell says the tangled supply chains and shortages that have bedeviled the U.S. economy since this summer have gotten worse and will likely keep inflation elevated well into next year. Powell has previously said that shortages and higher prices are mostly a result of the pandemic’s impact on supply lines, with factories in Asia temporarily closing amid COVID infections and dozens of cargo ships anchored offshore.

Inflation hasn't been this high in more than 10 years. And with the holiday spending coming up, a financial advisor said being strategic of when and what you buy will be your best bet.

"So you look at the cost of fuel, which has been up significantly. So maybe this is not the year to drive back east to visit the family because the cost of gas might be a little too high for you," explained David Anderson, a financial advisor and managing partner with Moneywise Wealth Management.

"Shopping early will also be key as we deal with supply chain issues," added Anderson. "We are moving into the Christmas season when demand goes up and when you see demand going up, prices go up. So, for the person who is going to delay and not do anything until right before Christmas you really run the risk this year of two problems. Paying a lot more and then number two possibly not getting your gifts on time."

Meanwhile, local businesses are hoping to cash in on the supply chain issues slowing down shipping for online shopping, including Kerry Ryan, owner of Action Sports.

"It used to be buy now and get in one day. But that is not going to happen this year. We planned really well a year and a half ago when COVID first hit. We placed orders that exceeded our sales probably by double or triple just forecasting that this was going to happen."

Ryan adds that they will make it through the holiday shopping season no problem but that if he were to place an order right now it would take a year to get here because there are either no parts being made where the products are coming from, or the items would be stuck in a container in the ocean.

With that, it seems for the next couple of months early shopping and planning will be key to saving some money. But Anderson pointed out inflation actually impacts Kern County more than other areas in the state.

"Particularly high here in Bakersfield because our wages are a little bit lower, we are seeing inflation in areas that really, really hurt."

Anderson added that contrary to popular belief, the one-dollar minimum wage employees in California will get in January, does not mean it will make inflation worse.

"There is not a lot of empirical data that shows that raising the minimum wage doesn't impact inflation all that much."

But the price of toys, food, and other products is not all that is increasing. Starting in November, natural gas will actually be almost twice as expensive as it was this time around last year which of course affects our energy bills. There are many reasons for that, like inflation, demand across seas, and believe it or not, even the drought is to blame.

Saving Money on Rising Energy Bills

PG&E spokesperson Katie Allen explained this issue is happening all across the country for all energy companies that are now having to pay more for the gas they provide residents. She said that because it doesn't get as cold in Kern County, most people don’t usually see a huge increase come winter. But this year will be different because of that price hike.

There are changes you can make that can help. One of them is setting your water heater thermostat to 120 degrees or lower to reduce the amount of energy it takes to keep your water hot.

Some changes however will make a bigger impact on that bill than others.

"More than 40 percent of your energy use is coming from the heating and cooling system," said Allen. "Obviously, it is the cooling system during the winter months. So customers can save 2 percent on their energy cost for every degree they decrease the thermostat."

She said although this one is the biggest bang for your buck, the small changes like making sure anything that is not being used is unplugged or making sure doors and windows are closed while the heater is running.

Set your thermostat for savings

You can save about 2% of your heating bill for each degree that you lower the thermostat (if the turndown lasts a good part of the day or night). Turning down the thermostat from 70°F to 65°F, for example, saves about 10%.

Control your water temperature

Set your water heater thermostat at 120°F or lower. This way you'll reduce the amount of energy it takes to produce and maintain your hot water by not overheating it. This short video offers easy instructions on how to properly set your water heater temperature.

Microwave and save

Reheating leftovers in a microwave takes less time and uses up to 80% less energy than a standard oven.

There are also several appliances that use less energy and there are actually rebate programs for some of these purchases. So Allen added that before you buy any appliances first check out their website to see which ones are eligible to save some money instantly and long term.

You can find more energy-saving tips on the PG&E website.

Another impact of inflation is rising gas prices.

23ABC In-Depth: Rising Gas Prices

According to numbers from the Automobile Club of Southern California, the national average price of gas per gallon is about $3.40. In California, the average price is over a dollar higher at $4.58. In Bakersfield, the average price per gallon is $4.49. Last week, the price was 4-cents cheaper at $4.45. It was ten cents lower than that a month ago and over a dollar cheaper per gallon this time last year. In Bakersfield, the record cost per gallon of gas is $4.64 and that was recorded back in 2012.