Durham, North Carolina — Many families across the Triangle are feeling the effects of rising prices.
WRAL News met with some of those families Tuesday at the Durham County Library, where the the county distributed free summer meals to students under the age of 18.
Durham resident Princess Rahman took advantage of free library food for her daughter.
“I never knew they did that, but it’s a good service,” Rahman said. “Anything practically free or any help will make a difference, even if it’s a small difference.”
Rahman is a single mother who works in the health care field. She said the price increase has been difficult for her.
“For the average person, I feel like as of right now, you have to make a minimum of $25 an hour to even survive, and jobs just don’t offer that,” Rahman said.
Rahman said he even asked for a raise at work, but said other co-workers have, too.
“I feel like, right now, we’re working just to get by as far as paying bills, having a roof over our heads, paying utilities,” Rahman said. “Anything outside of that is not possible right now.”
High gas prices in North Carolina, which are approaching $5 a gallon, are also a concern for Rahman.
“Even with gas, if you don’t have to drive, if you don’t go home from work, it’s not even worth it,” Rahman said.
Jetplane Coffee Closes Permanently
Jetplane Coffee at 810 North Magnum St. in Durham closed permanently this week after dealing with one economic hurdle after another during the pandemic.
“Jetplane and I have been up against the wall since we started,” said owner Daryn Berlin. “It’s a business that started in COVID.”
It was an emotionally difficult decision to close the cafeteria for Berlin, who put his heart and soul into the business.
“I think it’s hard for people who want to spend $5 a day on a cappuccino to do that when they see they’re going to have to pay $5 a gallon for gas,” Berlin said. “And I think a business like ours was one of the first to lose people to that kind of thing.”
With prices rising and labor shortages, Berlin said there was no way to make ends meet. His story is an example of the many pressures small businesses face.
“I don’t regret anything I’ve done here,” Berlin said. “Of course, it’s emotional. I love every moment of what I did here.”
The Federal Reserve considers raising interest rates
Duke University Professor of the Practice of Economics Connel Fullenkamp discussed how the Federal Reserve is considering raising interest rates. The Fed is expected to take action this week.
“Anything that pays interest, the rate is actually based on the government bond rate,” Fullenkamp said. “So if you pay a mortgage and you read the fine print, the interest rate you pay on a mortgage is actually going to be the interest rate on, say, the one-year government bond, plus a certain percentage.
“So when the Federal Reserve raises interest rates on government securities, all interest rates in the economy move with it. So when the Federal Reserve raises interest rates, say, half a percent, all other interest rates go up with it. So what that’s going to do then is make it more expensive to borrow.”
Fullenkamp said that if the Fed raises interest rates, things like shopping with your credit card or buying a new car will become more expensive. The idea is for people to delay optional purchases, which will help bring supply and demand closer to balance.
“The hope is that that will reduce aggregate demand and then cool inflationary pressures because one of the main causes of inflation is too much spending and not enough supply in the economy to provide everything that people want.” Fullenkamp said.
Investors are nervous that the Federal Reserve could be heading into uncharted territory. A three-quarter rate hike would certainly show that the Fed is genuinely concerned about inflation.
Yet a move of that magnitude, while not unprecedented, is rare. The last time the Fed raised rates three-quarters of a percentage point was in the Alan Greenspan era: November 1994.
In May, the Fed raised interest rates by half a point. It was an action the Fed hadn’t taken since 2000.
Fullenkamp thinks the Federal Reserve should be “aggressive” about raising interest rates. He believes a recession is “likely” and predicts it will happen in early 2023.
“Now, are we going to have a bad recession? I don’t think so,” Fullenkamp said. “I think it will be mild by historical standards.”
By Wednesday, the Federal Reserve is expected to reveal whether it plans to raise interest rates again.