ORONO, Maine (WABI) – As we head into the holiday weekend, is the high cost of everything holding back your plans not just for this weekend, but beyond?
TV5 spoke with a local economist about what awaits us.
“I would be very surprised if the economy wasn’t booming over the summer,” said Philip Trostel, professor of economics at the University of Maine.
“To be specific, there’s obviously been the stimulus packages that have been passed to try to get more money into people’s hands, but there’s also been a huge increase in the money supply by the Federal Reserve. “
Trostel says more money pumping into the economy is one of the driving forces, even with near-record inflation rates.
“As prices rise, it doesn’t make sense to keep your wealth in the form of money, does it? If the inflation rate is 8%, it’s essentially the real value of your assets that’s going down 8% a year. It’s a bit like an ice cream cone that melts in the sun. You must spend it before its value drops. You have to, you know, eat your ice cream before it all melts.
On Friday afternoon, a steady stream of traffic could be seen heading towards Route 1A, a known tourist trail.
“We haven’t been able to travel as freely as we’d like for quite a while,” he explained. “So all the things you talked about, rising house prices, eventually trickle down to more spending. You know, if I had a house that I bought for $200,000 and it’s selling for $400,000, I’m going to feel like I’m richer than I was before, and so I’m going to spend more because that I am richer than I was before.
Some families have seen their salaries increase with the cost of living. There are others who have yet to take advantage of these benefits and may choose to stay closer to home amid the soaring costs of things like monthly rent.
For others, two years of living in a pandemic put things into perspective.
“So what that suggests to me is that people are like, hey, life’s too short. I, you know, I’m close to retirement age, I thought I was going to work until ‘at 68 or 70. I’m just gonna go out there and stop working now. I think we’ve seen this type of behavior quite often in response to the pandemic. I mean, when people die, you know, that wait ?
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