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Expert: Spiraling energy costs are sign of pent-up demand
(Photo, “Strong Night Angles & Lines at Sheetz,” by Steve Rhode. Used under Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic License.)
“If you want to drive, then you’re gonna pay for gas, whatever the price is,” said Bridget Wisocki of North Versailles Twp.
As the nation begins exiting the COVID-19 pandemic, many people are noticing that prices on a wide range of goods have gone up.
According to the U.S. Bureau of Labor Statistics, overall prices for consumer goods increased 5 percent between May 2020 — when many states, including Pennsylvania, were in “lockdowns” — and May 2021.
Some prices have increased faster than others, according to BLS. Prices for food increased 2.2 percent, while prices for energy increased 28.5 percent. Prices for all items less food and energy rose 3.8 percent for the year ended May 2021, the largest 12-month increase since the year ended June 1992.
Lumber prices have more than doubled, with some reports indicating a 250 percent increase.
Local consumers, like Wisocki, said they’re feeling the impact, but they don’t have a choice.
“I don’t even really look at the price of gas anymore,” she said. “I just figure that I have to buy it if I’m going to drive my car.”
Even experts are having a hard time predicting where prices will stablize as the pandemic recedes.
“COVID-19 was a once in a lifetime, unprecedented, never happened before situation,” said Audrey Guskey, an associate professor of marketing at Duquesne University and consumer trends expert.
Guskey said the price hikes are the result of two things — a lack of products to sell at the same time demand is rapidly increasing.
She calls them “a direct result of supply chain issues accompanied with the loosening of the pandemic restrictions.”
“Many people were hibernating in their homes and were unsure about work or if they would even have a job, so they were not spending,” Guskey said. “Then, there was a lack of social gatherings, so you see things like women’s cosmetics and beauty products were not being purchased for over a year — now there is a high demand for them.”
Another sector of the economy seeing rapid price increases is real estate. Fortune Magazine reported in May that housing prices, on average, were up 15.5 percent in May over the previous year.
Houses are selling more quickly, as well. According to one report, in 2020, houses were typically on the market for 38 days. In May, homes were selling within 18 days.
Meanwhile, homeowners who are trying to remodel instead of purchase a new house are now caught in the middle of some of the highest lumber prices the country has ever seen, Guskey said.
“I know people that were actually in the middle of remodeling their home and now they had to put it on hold because the prices are just crazy,” she said.
The hot housing market is obviously good news for sellers, Guskey said.
“If you are trying to buy a house in this market, then it’s not so good,” she said. “The cost of lumber is just at an outrageously high price, and my fear is that some products may never come back down to where they were. This reminds me a lot of inflation in the 1970s.”
One positive note, Guskey said, is that interest rates have remained low. “But really, as consumers, we just have to hope that the spending stabilizes at some point,” she said.
Local residents agree that there is a significant increase in the price of everyday products, but many people aren’t letting it get them down.
“We are hopefully taking a vacation,” said Darlene Carson of McKeesport. “The price of groceries and everything is up but we are hopefully still going to go somewhere.”
Charisse Richards, an emergency medical technician who lives in McKeesport, said the price of gasoline won’t make her skip a summer holiday.
“We are definitely still going on vacation in August despite the rise in prices,” she said. “I work way too hard to miss my vacation. We will be going to Myrtle Beach.”
Guskey said many Americans are eager to get away this year as they try to get life back to normal.
“It’s like if you give a kid a dollar bill and don’t let him spend it for a year and then all of sudden you let him go spend it,” she said.
However, Guskey said, consumers shouldn’t panic into buying things they don’t need or taking trips they can’t afford.
“Look for alternative products where you can save some money, or possibly Google around and do your research to get the best prices that you can for now,” she said.
Guskey said that economists are hopeful that prices — and the housing market — will stabilize later this summer.
For now, she said, “consumers should just follow the advice of the experts and try to be smart.”
Jason A. Mignanelli is a freelance writer from Pittsburgh’s North Hills and a student at Duquesne University. He may be reached at firstname.lastname@example.org.
Originally published July 12, 2021.