As inflation jumped, income grew — for some
As inflation went into a steeper upward trajectory in the early months of this year, overall income for Connecticut residents ballooned at a slightly higher rate. But that increase was driven largely by the affluent financial services sector, with some households buckling this spring under intensifying price pressure for rent, fuel, food and other needs.
On Wednesday, Federal Reserve Chairman Jerome Powell told a U.S. Senate
Committee that the Fed will likely institute additional hikes in interest rates this
year in an effort to take the air out of inflation, on the
heels of last week’s increase of three quarters of a percentage point.
“Aggregate demand is strong — supply constraints have been larger and longer lasting than anticipated,” Powell said Wednesday testifying to the Senate Banking Committee. “High inflation poses significant hardships, especially on those least able to meet the higher cost of essentials like food, housing and transportation.”
As of March, Americans were spending $104.84 on average for goods and services that cost $100 only in December for a 3.1 percent hike, according to an online calculator maintained by the Bureau of Labor Statistics — but with pockets of the economy seeing extraordinary increases.
With growth in personal income at 5.4 percent in the first quarter, employers pumped an additional $4 billion into the Connecticut economy via paychecks and benefits between January and March, according to U.S. Bureau of Economic Analysis estimates released Wednesday.
Connecticut ranked 20th among states nationally, with South Dakota tops with 8.5 percent growth in personal income. Massachusetts, New Hampshire and Vermont all ranked in the top 10 with increases above 7 percent.
BEA bases its income estimates on paychecks, Social Security and other government benefits, rental income and investment dividends. It does not include capital gains as a result of changes in stocks prices.
The financial industry dominated Connecticut’s gain in personal income in the first quarter, despite a downward drift in stock prices that has continued through June.
Connecticut’s lowest-paid workers will be getting a raise in just over a week’s time, when the state’s minimum wage rises a dollar to $14 an hour. That equates to a 7.6 percent bump in pay over the coming 12 months, or an extra $2,000 for the worker pulling 40 hours a week, whether for a single employer or across multiple jobs.
The state’s minimum wage is slated to top out at $15 an hour in a year’s time, but many companies are already at that pay floor including Signet Jewelers, which has Kay Jewelers and Zales stores in several Connecticut malls.
Speaking last week on a conference call, Signet CEO
Gina Drosos acknowledged the company has seen shoppers cut back on “value tier” pieces, but suggested other price points have yet to see any significant reduction in demand.
“We are leaning into wedding-day merchandise and higher price point assortments,” Drosos said. “Price points above $3,000 — we are growing strongly.”
Paul McLean, chief merchandising officer for Norwalk-based Stew Leonard’s, told CTInsider he believes people are cutting back on eating out, with some switching to supermarket labels as an alternative to brand names they have long bought. But he said gourmet foods remain in demand — perhaps as people experiment with upscale cuisines in their own kitchens — and the chain’s hot buffet bars have performed strongly since the chain began offering them again in January after a pandemic hiatus.
He said Stew Leonard’s has adjusted how it stocks its warehouses in Danbury and Yonkers, N.Y., in order to save money on the front end to keep prices in check in the aisles.
“There’s been a lot of concern just based on fuel continuing to go up,” said Paul McLean, who joined Stew Leonard’s at the outset of the outset of the COVID-19 pandemic and worked earlier in his career at Whole Foods Market. “We’ve actually adjusted some of our logistics to work hand-in-hand with our suppliers to buy larger loads less frequently to cut some of the costs on that freight.”
On Wednesday, President Joe Biden formally called on Congress to suspend the federal gas tax for the summer, which is currently set at 18 cents a gallon for regular gas and 24 cents for diesel. That would save distributors anywhere from $30 to $72 at the pump depending on the size of a truck’s fuel tanks, with at least some of those savings passed on to retailers and consumers.
United Natural Foods executives said last week that they have been trying to help grocery stores stock substitute products at value price points. The company operates a large distribution center in Dayville near the Rhode Island border, and held a show this month at Mohegan Sun for customers to plan out their stocking plans for the upcoming holiday season and beyond.
“Our focus is really on how we can help our customers through it — help them stay competitive by working to ensure that they have the most possible lead time on price increases; and then, specifically through the summer, working with our suppliers to give our customers good sharp promotional price points, particularly in key value items,” Douglas during a conference call two weeks ago. “I think we’re having pretty good success in terms of doing everything we can to help them be as competitive as possible.”