Entering adulthood is hard, and inflation is making it even more difficult.
The biggest jump in prices in four decades is greeting Generation Z as they are graduating from college, moving out on their own and starting their first jobs. Add in property prices that have put home ownership out of reach, plus stocks suddenly cratering after two years of gains, and it is a brutal welcome to the real world.
“Inflation is challenging for younger generations because they have to bear all the costs of inflation, but don’t necessarily own the assets that will help their balance sheet keep pace with inflation,” says Jeff McDermott, a certified financial planner at Create Wealth Financial Planning.
For those who have not experienced market cycles in the past, this sudden change in the stock market and economy is especially confusing. To demystify the world of rate increases and economic gauges, here are a few common questions answered:
What is inflation?
Technically defined as a decline in a currency’s purchasing power, inflation manifests as an increase in the price of goods and services. It is not always terrible and can even promote growth, as long as it is maintained at a relatively low level. The US Federal Reserve aims to keep inflation at a rate of about 2 per cent.
However, the most common measure of inflation in the US — the consumer price index — surged 8.3 per cent in April, compared with the same period a year ago, among the highest readings since the early 1980s.
That means it now takes consumers more money to buy the same amount of goods, plus their cash savings are worth less than they were a year ago.
What is causing it?
It is complicated. The Covid-19 pandemic caused factories and plants to shut down or produce fewer goods, and disruptions to the supply chain made it more difficult to deliver those goods to consumers.
Meanwhile, Covid-19 stimulus cheques and increased savings from months of lockdowns made consumers more willing to spend, particularly as the pandemic eases in many places. That combination — of lower supply and higher demand — is pushing up prices.
The war in Ukraine and resulting sanctions on Russia made the situation even worse by sending prices surging for oil and key food exports such as wheat and corn, which is making it more expensive for regular people to fill up their cars, heat their homes and buy groceries.
How do we fix inflation?
Enter the US Federal Reserve. One of its main jobs is to keep prices stable, which it can do by raising or lowering interest rates. Most recently, the Fed increased the benchmark rate by a half percentage point, the biggest increase since 2000.
Although inflation declined slightly in April from the prior month, it is still extremely elevated and the Fed will almost certainly raise interest rates several more times this year. This is prompting fears of an economic slowdown, which is sometimes an unintended consequence of higher rates.
Why is Gen Z suffering the most?
Younger people usually have less savings and make a lower salary than their older peers, making it even more difficult for them when everyday necessities such as fuel and groceries suddenly cost more.
Plus, many are struggling under debt from college, with 34 per cent of adults aged 18 to 29 holding student loans, according to the US Education Data Initiative. And wages have not kept up with inflation, increasing by only 4.7 per cent in the first quarter from a year earlier.
Gen Zers are also finding that a larger portion of their hard-earned pay cheques is going towards housing costs. Rents have surged almost twice as fast so far in 2022 than in the previous year, particularly in major metropolitan areas such as New York City, where they jumped by 38 per cent in April to a median monthly cost of $3,420 for a one-bedroom apartment, according to rental platform Zumper.
The recent stock market crash is only making matters worse. Longer term, financial advisers say investing in stocks, especially through tax-efficient strategies such as 401(k)s, is a smart move. But it is difficult to watch hard-earned investments shrink, even more so if they are earmarked for a down payment on a house or a wedding.
And timing is everything: for those who put money in the S&P 500 index at its coronavirus pandemic depths in March 2020, they have made a total return on their investment of about 80 per cent. But those who invested at the beginning of this year are facing a decline of about 20 per cent.
It is a similar story in the housing market. Those who owned homes before the pandemic have ridden a nationwide boom in house prices, building equity along the way.
But that same trend has left home ownership out of reach for many younger people. In February, a gauge of home prices in the 20 largest US cities rose 20.2 per cent from a year earlier.
At the same time, mortgage rates are now at the highest since 2009, pushing up monthly payments.
What can you do to protect your wallet?
The main thing advisers stress: don’t panic. Although this year’s drop in stocks has been startling and rising prices are straining budgets across the country, the pain could be temporary.
Historically, at least, equities rise over time. That means it is actually a good idea to invest in broad-based indexes such as the S&P 500 now, when stocks are cheaper, says Jonathan Huss, certified financial planner at Hussmen Financial. He also recommends re-examining your budget and cutting back on items such as subscription services.
Another tactic is to embrace sharing, according to Eric Walters, founder of Summit Hill Wealth Management.
“It is a good time to get a roommate and share the cost of a hotel room with friends for travel,” he says.
Finally, it can be helpful to know which items are most affected by inflation. For instance, prices for fuel and plane tickets are increasing while the movie tickets and the cost of admission to sports events are not.
“Make sure to budget your fun spending, and don’t get caught spending too much for things that don’t really bring you any joy and aren’t necessities,” says Joseph Brady, founder of Rock Financial Planning.
RESULTS
6.30pm: Al Maktoum Challenge Round-1 Group 1 (PA) Dh119,373 (Dirt) 1,600m
Winner: Brraq, Adrie de Vries (jockey), Jean-Claude Pecout (trainer)
7.05pm: Handicap (TB) Dh102,500 (D) 1,200m
Winner: Taamol, Connor Beasley, Ali Rashid Al Raihe.
7.40pm: Handicap (TB) Dh105,000 (Turf) 1,800m
Winner: Eqtiraan, Connor Beasley, Ali Rashid Al Raihe.
8.15pm: UAE 1000 Guineas Trial (TB) Dh183,650 (D) 1,400m
Winner: Soft Whisper, Pat Cosgrave, Saeed bin Suroor.
9.50pm: Handicap (TB) Dh105,000 (D) 1,600m
Winner: Hypothetical, Mickael Barzalona, Salem bin Ghadayer.
9.25pm: Handicap (TB) Dh95,000 (T) 1,000m
Winner: Etisalat, Sando Paiva, Ali Rashid Al Raihe
ONCE UPON A TIME IN GAZA
Starring: Nader Abd Alhay, Majd Eid, Ramzi Maqdisi
Directors: Tarzan and Arab Nasser
Rating: 4.5/5
The cost of Covid testing around the world
Egypt
Dh514 for citizens; Dh865 for tourists
Information can be found through VFS Global.
Jordan
Dh212
Centres include the Speciality Hospital, which now offers drive-through testing.
Cambodia
Dh478
Travel tests are managed by the Ministry of Health and National Institute of Public Health.
Zanzibar
AED 295
Zanzibar Public Health Emergency Operations Centre, located within the Lumumba Secondary School compound.
Abu Dhabi
Dh85
Abu Dhabi’s Seha has test centres throughout the UAE.
UK
From Dh400
Heathrow Airport now offers drive through and clinic-based testing, starting from Dh400 and up to Dh500 for the PCR test.
Honeymoonish
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'The worst thing you can eat'
Trans fat is typically found in fried and baked goods, but you may be consuming more than you think.
Powdered coffee creamer, microwave popcorn and virtually anything processed with a crust is likely to contain it, as this guide from Mayo Clinic outlines:
Baked goods - Most cakes, cookies, pie crusts and crackers contain shortening, which is usually made from partially hydrogenated vegetable oil. Ready-made frosting is another source of trans fat.
Snacks - Potato, corn and tortilla chips often contain trans fat. And while popcorn can be a healthy snack, many types of packaged or microwave popcorn use trans fat to help cook or flavour the popcorn.
Fried food - Foods that require deep frying — french fries, doughnuts and fried chicken — can contain trans fat from the oil used in the cooking process.
Refrigerator dough - Products such as canned biscuits and cinnamon rolls often contain trans fat, as do frozen pizza crusts.
Creamer and margarine - Nondairy coffee creamer and stick margarines also may contain partially hydrogenated vegetable oils.
SPECS
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COMPANY%20PROFILE
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Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Difference between fractional ownership and timeshare
Although similar in its appearance, the concept of a fractional title deed is unlike that of a timeshare, which usually involves multiple investors buying “time” in a property whereby the owner has the right to occupation for a specified period of time in any year, as opposed to the actual real estate, said John Peacock, Head of Indirect Tax and Conveyancing, BSA Ahmad Bin Hezeem & Associates, a law firm.
Skoda Superb Specs
Engine: 2-litre TSI petrol
Power: 190hp
Torque: 320Nm
Price: From Dh147,000
Available: Now
New UK refugee system
- A new “core protection” for refugees moving from permanent to a more basic, temporary protection
- Shortened leave to remain - refugees will receive 30 months instead of five years
- A longer path to settlement with no indefinite settled status until a refugee has spent 20 years in Britain
- To encourage refugees to integrate the government will encourage them to out of the core protection route wherever possible.
- Under core protection there will be no automatic right to family reunion
- Refugees will have a reduced right to public funds
The Uefa Awards winners
Uefa Men's Player of the Year: Virgil van Dijk (Liverpool)
Uefa Women's Player of the Year: Lucy Bronze (Lyon)
Best players of the 2018/19 Uefa Champions League
Goalkeeper: Alisson (Liverpool)
Defender: Virgil van Dijk (Liverpool)
Midfielder: Frenkie de Jong (Ajax)
Forward: Lionel Messi (Barcelona)
Uefa President's Award: Eric Cantona
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SPEC%20SHEET
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ALRAWABI%20SCHOOL%20FOR%20GIRLS
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Racecard
6.35pm: The Madjani Stakes – Group 2 (PA) Dh97,500 (Dirt) 1,900m
7.10pm: Evidenza – Handicap (TB) Dh87,500 (D) 1,200m
7.45pm: The Longines Conquest – Maiden (TB) Dh82,500 (D) 2,000m
8.20: The Longines Elegant – Conditions (TB) Dh82,500 (D)
8.35pm: The Dubai Creek Mile – Listed (TB) Dh132,500 (D) 1,600m
9.30pm: Mirdif Stakes – Conditions (TB) Dh120,000 (D) 1,400m
10.05pm: The Longines Record – Handicap (TB) Dh87,500 (D) 1,900m
Results
5pm: Warsan Lake – Maiden (PA) Dh80,000 (Turf) 2,200m; Winner: Dhaw Al Reef, Sam Hitchcott (jockey), Abdallah Al Hammadi (trainer)
5.30pm: Al Quadra Lake – Maiden (PA) Dh80,000 (T) 1,600m; Winner: Mrouwah Al Gharbia, Sando Paiva, Abubakar Daud
6pm: Hatta Lake – Handicap (PA) Dh80,000 (T) 1,600m; Winner: AF Yatroq, George Buckell, Ernst Oertel
6.30pm: Wathba Stallions Cup – Handicap (PA) Dh70,000 (T) 1,600m; Winner: Ashton Tourettes, Adries de Vries, Ibrahim Aseel
7pm: Abu Dhabi Championship – Listed (PA) Dh180,000 (T) 1,600m; Winner: Bahar Muscat, Antonio Fresu, Ibrahim Al Hadhrami
7.30pm: Zakher Lake – Rated Conditions (TB) Dh80,000 (T) 1,400m; Winner: Alfareeq, Dane O’Neill, Musabah Al Muhairi.
The%20specs%3A%202024%20Mercedes%20E200
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F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
Results
6pm: Dubai Trophy – Conditions (TB) $100,000 (Turf) 1,200m
Winner: Silent Speech, William Buick (jockey), Charlie Appleby
(trainer)
6.35pm: Jumeirah Derby Trial – Conditions (TB) $60,000 (T)
1,800m
Winner: Island Falcon, Frankie Dettori, Saeed bin Suroor
7.10pm: UAE 2000 Guineas Trial – Conditions (TB) $60,000 (Dirt)
1,400m
Winner: Rawy, Mickael Barzalona, Salem bin Ghadayer
7.45pm: Al Rashidiya – Group 2 (TB) $180,000 (T) 1,800m
Winner: Desert Fire, Hector Crouch, Saeed bin Suroor
8.20pm: Al Fahidi Fort – Group 2 (TB) $180,000 (T) 1,400m
Winner: Naval Crown, William Buick, Charlie Appleby
8.55pm: Dubawi Stakes – Group 3 (TB) $150,000 (D) 1,200m
Winner: Al Tariq, Pat Dobbs, Doug Watsons
9.30pm: Aliyah – Rated Conditions (TB) $80,000 (D) 2,000m
Winner: Dubai Icon, Patrick Cosgrave, Saeed bin Suroor
'The Woman in the House Across the Street from the Girl in the Window'
Director:Michael Lehmann
Stars:Kristen Bell
Rating: 1/5
Sheer grandeur
The Owo building is 14 storeys high, seven of which are below ground, with the 30,000 square feet of amenities located subterranean, including a 16-seat private cinema, seven lounges, a gym, games room, treatment suites and bicycle storage.
A clear distinction between the residences and the Raffles hotel with the amenities operated separately.
UAE currency: the story behind the money in your pockets
Profile of Tarabut Gateway
Founder: Abdulla Almoayed
Based: UAE
Founded: 2017
Number of employees: 35
Sector: FinTech
Raised: $13 million
Backers: Berlin-based venture capital company Target Global, Kingsway, CE Ventures, Entrée Capital, Zamil Investment Group, Global Ventures, Almoayed Technologies and Mad’a Investment.
RESULTS
6pm: Mazrat Al Ruwayah – Group 2 (PA) $40,000 (Dirt) 1,600m
Winner: AF Alajaj, Tadhg O’Shea (jockey), Ernst Oertel (trainer)
6.35pm: Race of Future – Handicap (TB) $80,000 (Turf) 2,410m
Winner: Global Storm, William Buick, Charlie Appleby
7.10pm: UAE 2000 Guineas – Group 3 (TB) $150,000 (D) 1,600m
Winner: Azure Coast, Antonio Fresu, Pavel Vashchenko
7.45pm: Business Bay Challenge – Listed (TB) $100,000 (T) 1,400m
Winner: Storm Damage, Patrick Cosgrave, Saeed bin Suroor
20.20pm: Curlin Stakes – Listed (TB) $100,000 (D) 2,000m
Winner: Appreciated, Fernando Jara, Doug O’Neill
8.55pm: Singspiel Stakes – Group 2 (TB) $180,000 (T) 1,800m
Winner: Lord Glitters, Daniel Tudhope, David O'Meara
9.30pm: Al Shindagha Sprint – Group 3 (TB) $150,000 (D) 1,200m
Winner: Meraas, Antonio Fresu, Musabah Al Muhairi
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Pieces of Her
Stars: Toni Collette, Bella Heathcote, David Wenham, Omari Hardwick
Director: Minkie Spiro
Rating:2/5
Trolls World Tour
Directed by: Walt Dohrn, David Smith
Starring: Anna Kendrick, Justin Timberlake
Rating: 4 stars
Bundesliga fixtures
Saturday, May 16 (kick-offs UAE time)
Borussia Dortmund v Schalke (4.30pm)
RB Leipzig v Freiburg (4.30pm)
Hoffenheim v Hertha Berlin (4.30pm)
Fortuna Dusseldorf v Paderborn (4.30pm)
Augsburg v Wolfsburg (4.30pm)
Eintracht Frankfurt v Borussia Monchengladbach (7.30pm)
Sunday, May 17
Cologne v Mainz (4.30pm),
Union Berlin v Bayern Munich (7pm)
Monday, May 18
Werder Bremen v Bayer Leverkusen (9.30pm)
