photo by Lovely Hitchcock
The Financial 411: How the Economy Is Affecting REAL People in Billings
by anna rogers
Like the rest of the nation, Billings is feeling a financial crunch. Inflation, gas prices, interest rates, home and rent prices, and a low-performing stock market are all interconnected and create the perfect economic storm.
We hear about it on the news, but it’s not just a headline. The economic crisis is impacting real people here in our city – businesses, schools, and families. The reality is that most individuals cannot afford their previous lifestyle, and for many, that realization is just catching up to them.
The Hard News
Governments are rushing to reduce inflation, but a study by The Wharton School of the University of Pennsylvania estimates that the recent Senate-passed Inflation Reduction Act’s “impact on inflation is statistically indistinguishable from zero.” It’s hard to say when things will take a turn for the better. Gas prices are going down, the stock market is stabilizing, and mortgage interest rates aren’t nearly as high as they’ve been in decades past – but still, there is a sense of uncertainty weighing on people.
“I had a friend who was joking about gas prices and how she shouldn’t leave her car idling,” a Billings mom of three tells me. “She asked if our family is feeling the impact of inflation on our budget. It was a timely question, as just this week, my husband and I noticed how not changing existing habits has caused us to burn through our monthly cash flow. We need to readjust our priorities because we’re not affording our previous lifestyle. She laughed and said she and her husband had the same realization this month. It’s all catching up.”
Living the same means living more expensively with the rate of inflation we’re experiencing. It’s causing Billings’ consumers to take a pause and reassess. This means not taking the trip, not remodeling the bedroom, not buying the coffee, and for some, an inability to invest.
“Rent is ridiculous,” says a single local who works full-time for a local nonprofit. “I’ve already been told my rent will go up again next year. This is impacted by inflation, but specifically in Billings by more affluent people moving to the area. It’s driving up the rent cost. If I had a mortgage instead, it would be consistent, but I don’t have enough money with my current bills and needs like gas and groceries to be able to save up for a down payment. Not to mention interest rates and house prices.”
The nonprofit sector is noticing decreases in donorship due to rising costs of living. On top of that, as the cost of goods and services increases, it decreases what nonprofits can achieve with the money they receive. This impacts the salaries of employees and the effectiveness of the nonprofit.
The situation is the same for other local businesses, but to deal with rising costs, they’re forced to raise prices. “We waited as long as we could to increase our prices,” a local business owner tells me. “But with supply chain issues, rising costs of materials, and the need to pay increased wages, we just had to do it.”
The Way Through
“We haven’t really changed our lifestyle… but we should.” That’s the mom of three, who says she feels like their family is in a spot of privilege to be only having to cut back on superfluous spending and not any necessities. “We want to continue living like we did, but it’s time to put pen to paper and break it down. We’ve noticed that we aren’t spending within our goals.” For this family of five, they’re cooking more at home, choosing not to take expensive flights, and putting a home remodel project on hold.
The local nonprofit employee is keeping her budget tight. “Taking road trips is very difficult. I took my first vacation this year and was freaking out watching my bank account dwindle. I don’t go out to eat unless someone invites me and it’s a special occasion. It’s just too expensive.”
Local businesses are wading through these tough times by seeking new ways to add value to their services or products and becoming more efficient. Some offer less expensive options or packages to accommodate individuals or businesses who have had to cut their budgets back due to inflation. Many are trying to balance dealing with their own cost increases while keeping prices as low as possible for their customers – but this means lower margins.
One local business owner who works with national clients says inflation hasn’t hit his business in disastrous terms, but it’s certainly made a tangible impact. “To ensure my employees are well taken care of during this time, I did give an inflationary raise this year to each team member in addition to other expected performance raises and bonuses to keep them in line with the rise in living expenses. Losing profitability is never ideal, but we've certainly not had it worse than others.”
It’s getting harder to plan for the long term, and many businesses are putting big plans for expansion or new projects on hold.
The Bright Side
The “World Economic Outlook Update” put out by the International Monetary Fund in July describes the global economic outlook as “gloomy and more uncertain.” In a Wall Street Journal poll, 83% of Americans describe the economy as “poor or not so good.” People are generally pessimistic about the economy, but for some businesses, it’s a chance to reinvent. Others are seeing their product or service valued in a different light because money is tight for most.
“I have been busier than ever, even with my middle-of-the-year price increases,” says a local photographer. “I feel like people are seeing how fleeting life is and how important it is to capture memories while they can. I’m noticing that my clients prioritize things that will last, like family pictures before their oldest son leaves for college, over having one more toy in the garage to use four times each summer.”
Families are putting their heads together to cut costs in creative ways. Sometimes that looks like more simplistic family time – a nearby camping trip instead of a big destination vacation, cutting back on activities and only continuing the ones that hold the most passion, and more time at home around the table eating meals than eating out or on the go. Holding on to these moments with the ones we love makes the economic situation feel a little less daunting.
Originally printed in the October 2022 issue of Simply Local Magazine
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Anna Rogers is a transplant from the Carolinas with a background in marketing and graphic communications. She is a wife and mother who loves to garden, cook, and practice yoga. Anna is passionate about travel, which at its core is really a passion for people, as she believes people and community are what truly bring life and beauty into a place.
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