The Cost of Living in America is MAKING PEOPLE GIVE UP

People are really starting to give up on this economy now that it's becoming clear that things are not going to get much better for quite some time because the most recent consumer sentiment survey came out from the University of Michigan and it fell tremendously. People are going from feeling anxious to feeling, you know, like things are catastrophic essentially. It actually fell 11 percent to 50.8, which is the lowest level that we have seen since the low readings that we had during the pandemic, guys. So people are feeling about as good about the economy right now as they did when we were in the middle of a world pandemic. The survey states that the decline was unanimous across all age groups, across all education groups, across geographic regions, across political affiliations. It doesn't matter who you are. People are not feeling good about where things stand right now. And why would they? According to the survey, the share of respondents expecting unemployment to rise in the coming months increased for the fifth straight month and is now the highest since 2009 during the Great Recession. So pretty much across the board unanimously, people agree that unemployment is going to be on the rise for the foreseeable future. And it's not just a belief. It's something that is actually happening. I have covered numerous job losses on this channel, most notably the one with the government that we saw in the month of March, highest month of job losses since at least the last 10 years, guys. So things are really starting to get real right now and people are starting to notice it. Man, today is party day in South Beach. That's the place to be out there. It's out on the water chilling, 83 degrees outside. Doesn't get much better than that. And I'm sure that people in that category are not too worried, right? And why would they be? If you're out on a boat on a day like today and living it up, there's probably not much to worry about. And people see this in my videos and everybody's like, well, everything must be fine down there, Michael. Well, yeah, it is for people that have that kind of life that can do that and can afford that. But that is just a very, very small percentage of people. Take a look around here, guys. As I walk down the street, you got guys working on these houses and stuff. Most people have to work for a living. They're not out there enjoying those boats. That is just a small, small percentage of people who are lucky enough and rich enough to be able to do that. Americans are now expecting inflation to reach 4.4 percent this year, which is up even higher from the previous reading. I remember talking about this just a month ago. It went by so fast, right? And the previous expectation was that inflation was going to go up to 4.1 percent. Now the expectation is 4.4 percent. So it is just continuing to get worse. Americans' expectations of inflation now are at the highest level since 1991, according to Capital Economics. You see all these guys here? They're all working, guys. Everybody here is working, including me. I'm working making this video. I'm not out on the boat having fun. So, yeah, are people out there doing well and, you know, having a good time? Absolutely. But just remember that most of us still have to be grinding right now in order to make anything happen. And we should be lucky right now to be somebody that is in the position to still be able to make money and still pay for our lives and not have to worry about where the next paycheck is coming from, because that is the worst position to be in. Now, typically what this falling sentiment means is that Americans are going to cut back on spending, and that is just going to lead us into a situation where the economy slows down even further. And like I reported a couple of weeks back, the spending is already negative right now when you factor in inflation, because inflation is outpacing everything right now, including the small upticks that we've been getting in consumer spending. I know there's people out there right now that are panic spending due to the impending tariffs, but in reality, I feel like that's largely unnecessary because you can just see how much all of this has been canceled and reversed and put on pause and all of this. And spending a lot of money in anticipation of these tariffs that may very well never really materialize the way everybody's worried about, I think is not very smart right now, especially if you have to go in debt to do it. Now, if you're somebody that has the extra cash laying around and you're buying things that you know you're going to need and use anyways, that's one thing. But if you're following the herd and you are just running over the cliff like everybody else and getting deeper into debt to do it, that's pretty stupid right now. But what you should be worried about instead is because of how low the consumer sentiment is right now and because of how shaky ground we are on, a lot of financial experts now are recommending that you have a 12 month emergency fund. For the longest time, it was kind of like, yeah, you can get away with having a three month emergency fund. That should be okay. Right? And then that kind of got notched up to a six month emergency fund instead, especially as unemployment started to rise over the past couple of years, especially with how fast it was rising. Well, now all the stops are being pulled out and it's being recommended that you have a 12 month emergency fund due to the instability of our economy right now. Because you have to understand, guys, that pretty much everybody is on the chopping block right now when it comes to who might lose a job and who might not. And if you do, it is very difficult to replace your job and especially replace the income you had at that job. So having that 12 month emergency fund can make the difference between, can you make your car payment? Can you make your mortgage or your rent payment? Can you continue to feed your family without putting it on credit card or buy now pay later? Those things are very important. Many of the major economists are also predicting more than a 60% chance of a recession happening this year. The typical chances of a recession in any given year when things are normal and good is 15%. So now most people and most companies are predicting 60% chance, which just means that, you know, there's all starting to acknowledge the fact that we've pretty much been in a recession and they're all saying, listen, it's probably going to become official at some point this year. And the big problem right now is if you lose a job, it is taking on average unemployed people nearly six months to find a new job. And so, yeah, can you get away with having a six month emergency fund? Sure. But that's only going to cover your basic needs and essentials during that time. And if any other type of expense comes up, well, then you're going to have to put debt behind it in order to pay for it. And this is why I keep telling people to cut your discretionary spending now while you're ahead. If you're in a position to have a little extra income that you can put on the side right now, that's probably the smart thing to be doing in this rocky environment. But the thing is, having a 12 month emergency fund probably isn't realistic for the vast majority of Americans, because just as recently as May of 2024, Bankrate did a survey and they found out that only 28% of people had at least six months worth of expenses saved and 16% had between three and five months worth of expenses saved and 29% had less than three months of expenses saved and 27% had no emergency savings at all. So the vast majority of people are way behind the eight ball on this one. But people need to understand that now is a time of volatility, right? Nobody really knows what's going to happen tomorrow or even next week. And so this is kind of a temporary goal that people should be aiming for in order to protect themselves and their family. It's not like you're always going to have to have a 12 month emergency fund. It's just being said that you should have it right now due to the instability. And I've already gone over in previous videos, a bunch of different things that you can do to cut back right now. In fact, I made an entire video about it just a few days ago. So you can go ahead and check that out if you're interested in things that you can do in order to try and make that happen and get towards that six to 12 months of emergency fund right now. But one thing that people are eyeballing right now as an extra source of income is their tax return. In fact, so far in 2025, the average tax return refund has been $3,170 according to the IRS. And there is some promising news with this because 49% of people surveyed by the National Retail Federation said they plan to save it compared to only 28% last year. So this is directly in line with consumer sentiment. The amount of people that are planning on saving that tax refund went up by 20 percentage points in just one year, guys. Why do you think that is? You think that's a coincidence? Of course not. This is because people know that tough times are here and they're going to remain here for quite some time. They talked to one guy in this story who received a tax refund of only $1,245, not a whole lot of money, but he used that money to pay off his car loan. He's only 26 years old and he really had a goal to pay off this car loan and it was only a three-year loan to begin with, but he wanted to pay it off as soon as possible. And this refund came in and it was just enough for him to pay it off. So good for him. Congratulations to this young guy for doing something smart, because usually it's younger people that are the ones that are not making the smartest decisions. But in this case, the guy did the right thing. This is a quote from him. He says, So that's just awesome, man. I love hearing that from people that are younger and realize early on that having that extra weight on your shoulders does nothing but slow you down in terms of getting ahead in life. And before this tax refund came in, he was actually paying about double his $300 monthly payment, putting $600 a month basically towards it. And he had $4,000 left on the balance and he combined the refund with savings that he'd been saving up in order to pay off the loan. And it's a 2022 vehicle, so a fairly new car. Now he has a quite new car that he's completely debt-free on. So that's just awesome. But unfortunately, a lot of other people are using the tax refund as their lifeline to actually pay bills right now because it's the only extra source of income they have. And it turns out that these tax refunds are one of the biggest payments that most people will receive all year long, guys, which is sad because it means that people just don't have the money that they need to get by. And according to the data, the most common uses for a tax refund check are things like buying necessities, big purchases like cars and trips. So buying necessities, I can understand, but big cars and trips right now, come on. But going back to what I said before, almost half of the people surveyed said that they're planning on saving the money this year. And a lot of them are also going to be using it towards paying off debt, which is a good sign. It's a good sign that more and more people are waking up, getting with the program and realizing that things aren't so great. Let's just pay off what I have. Let's try to conserve what I have rather than try to go overboard right now, because also part of that survey, about one third of people said that they plan on using that refund to pay off debt this year, which was up from 20 percent last year. So the responsible use of this money and the planned use of it is increasing a lot in 2025. It gives me hope that once people finally realize that tough times are here, that people will start making the right decision and not just, you know, burn it all to the ground and go deeper and deeper into debt and file bankruptcy. Of course, you're always going to have some folks that decide to take that route, but a lot of people are starting to wisen up and get responsible. But it's just sad how many people are relying on this money to get by, because according to Credit Karma, 49 percent of people said they were depending on their refund to make ends meet more this year than in years past. And of those people who have already received their refund, 64 percent said they used a method to access their money early. I mean, people are that hard up for cash right now that more than half of them are using these methods to collect the money early, which means you end up getting less in the end. So managing debt is now one of the top priorities for people across all income spectrums. Even high income folks are hunkering down right now and focusing on tackling their debt right now. If people have been listening to what I've been saying here on the channel to not even have any debt, well, guess what? When you get that extra money, that extra money, you have to save or invest. You don't even have to use it to tackle debt. So you see how these small lifestyle changes can add up to big changes in the end. One thing I like about my life, guys, is at least I can sleep at night knowing I don't owe anybody anything, except for the mortgage on my condo. I don't have any debt and it's a fairly low interest mortgage and I'm not worried about it. So if you are one of the lucky ones who's actually getting a tax refund this year, let us all know what you're doing with it. Are you saving it? Are you investing it? Are you using it to pay off bills or debt? Let us all know. Now, the last thing is Publisher's Clearinghouse. They are filing for bankruptcy. And in case you've never heard of this, I don't blame you because it's something that really hasn't been in the spotlight for a long time. But when I was a kid, they used to have these commercials on TV with these people that would knock on their door and hand them this huge check for a million or $5 million, whatever. The name of that company that did that was called Publisher's Clearinghouse. It was kind of like winning the lottery in a way. Well, they just filed for Chapter 11 bankruptcy. But even though they're filing for bankruptcy, they're not disappearing for good. Apparently, they're still going to be operating business as usual. And Publisher's Clearinghouse says that they have awarded people over $618 million over the more than 50 years they've been in business now. But who would have thought a company that's in business of giving away money is having tough financial times right now? Obviously, the business model for a company like Publisher's Clearinghouse is a lot like insurance. You know, we collect more than we give away and we can still turn a profit. And that's how they make their money. But it's getting harder and harder to do that, guys, even for companies like this. So pretty much like I was saying before, anything is fair game right now when it comes for companies that can go out of business, jobs that may end up getting cut or lost during this period of instability. You really don't know what's going to happen. So having that 6 to 12 month emergency fund and being out of debt is going to be your best friend if you're somebody that unfortunately finds themselves in this situation. I know a lot of people say that I talk about a lot of the same things repeatedly on this channel. But I hope that at least I can always bring a new, fresh angle to these videos. And each time you learn something new and I can tell you something a little bit different than how you've heard it before to keep this fresh and interesting. So let me know if I'm doing a good job about that as well. So if you enjoyed this video, make sure you are subscribed to the channel. And if you don't want to wait for my next video to come out, check out this one on the screen right over here. And I'll see you in the next one.