Patriot Ledger, The (Quincy, MA) - Monday, February 11, 2008
By Adam Riglian, The Patriot Ledger
Paul Gallagher keeps the heat in his home at 65 degrees, drives his SUV less and buys groceries in bulk.
The father of a 13-year-old son and 8-year-old triplets has changed his lifestyle to help deal with the high price of necessities, stagnant wages and a slowing economy.
'It's getting more and more difficult to keep a budget,' said Gallagher, a vice president of State Street Bank and a Kingston selectman. 'You are cutting into your savings to pay for (heating) oil, you're not going out to eat as often, you're not buying anything in excess you are going to BJ's and buying in bulk.'
Like many, Gallagher is feeling the financial squeeze from an economy that some say is already in recession, coupled with near-record prices for food and fuel.
The U.S. Labor Department recently reported that consumer prices rose by 4.1 percent in 2007, the biggest increase in 17 years, while wages went up by only 3.2 percent. Energy costs rose by 17.4 percent and food costs rose by 4.9 percent. Both were the biggest increases since 1990.
And, according to the U.S. Bureau of Economic Analysis, the gross domestic product the total market value of all final goods and services produced in the country grew by just 0.6 percent in the fourth quarter of 2007, down from 4.9 percent in the third quarter.
The RBC CASH Index, a monthly national survey of consumer attitudes on the current and future state of local economies and people's financial situations, shows that consumer confidence is the lowest it's been since the survery began, in 2002.
Lee Forker of Hingham, the founder of New England Research & Management, says he believes the economy is already in a recession that could last at least a year.
'I am part of the minority group of economists and strategists that think this recession is in the early stages and that it will get worse,' Forker said.
Prices of necessities have been creeping up in the last few years, so the hit on people's wallets has grown, he said. Consequently, people have less discretionary money to spend, he said.
Forker advises consumers to scrutinize 'every single expenditure they make from this point forward.'
Dan Heitzman of Marshfield, founder and president of Stonebridge Financial Consultants in Rockland, says people should pay down credit-card debt and apply for a home equity line of credit in case money is needed for an emergency.
'Pay down some debt and get (yourself) situated for the long haul,' Heitzman said.
Normally, prices come down when the economy slows, but Heitzman and Forker expect food and fuel prices to remain high because of strong worldwide demand.
Paul Phillips, president of the Quincy Education Association, said workers are beginning to notice that wages are lagging behind inflation.
'You agree to a 3 percent raise and you find out whether you won or lost later,' said Phillips, who added that his union 'broke even' in 2007.
Phillips said members of the union are 'nervous' about their wages keeping pace this year.
Michele Stokes Howes, a Weymouth mother of 8-year old twins, is trying to pinch every penny in her $150-a-week food bill.
Her family eats out less frequently and she is shopping at a supermarket that offers better deals.
'We used to go out a lot more than we do now,' Stokes Howes said. '(Now) we go maybe once every other week. Even a Coke nowadays is $2.50 at some places.'
Stokes Howes has even resorted to using discount coupons, a first for her.
'I've started cutting out coupons,' she said. 'I used to have that 'I can't be bothered mentality.''
For Gallagher, energy costs have been even more difficult to cope with than high food prices.
'It's killing me,' he said. 'My oil bill for November was $417; in December it was $577. I just wrote a check yesterday for $617 for January. And I can tell you, we don't have the heat going.'
Gallagher also said he pays $50 a week to fill up his Toyota Camry with gasoline and $75 every two weeks for his Chevrolet Suburban.
'I think oil is going to kill everybody,' he said.
Adam Riglian may be reached at ariglian@ledger.com.
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