LAS VEGAS (KLAS) — Faced with rising inflation, including record-high gas prices, Americans are the most downcast about the U.S. economy since the start of the COVID-19 pandemic, according to a new Gallup poll.
Inflation reminds top of mind for consumers. It’s a broad increase in the prices associated with a constant amount of goods and services, and is typically referred to as a negative factor. So, who does inflation hit the hardest?
Host of “Afford Anything” podcast Paula Pant said retirees who keep most of their assets in the form of cash suffer the worst.
“Inflation is really bad for savers,” Pant told 8 News Now.
But, inflation isn’t completely bad for everyone.
“If you’re a borrower with a fixed interest rate, then inflation works in your favor,” she noted.
Let’s say you have a mortgage with a 3% or 4% fixed rate loan: when inflation is above the interest rate on your mortgage, you pay back your mortgage in cheaper and cheaper dollars over time.
The same can be said for anyone who has a student loan or a car loan, or any type of debt that has a fixed interest rate.
She added that inflation also works in favor of people who own a lot of tangible assets.
“Something like a house, a car, art, or jewelry, things that are tangible goods, those things tend to hold value over time, inflation could be good for you, or less bad for you, then somebody who has most of their money in cash,” she said.
Inflation also removes the risk of deflation. When prices fall as a result of deflation, factories produce less and are forced to lay off workers, which means that unemployment rises.