The poor are battling inflation as the rich spend this holiday season

As the holiday season begins, cash-rich luxury travelers have kept Boston’s Langham Hotel busier than expected, with gilded conference rooms reserved for meetings, upscale suites reserved and Thanksgiving brunch at $135 per adult sold weeks in advance.

According The New York TimesDemand for a less fancy catering service has soared across the city, in Dorchester, at the Catholic Charities free pantry.

Beth Chambers, vice president of basic needs at Catholic Charities Boston, told the outlet that there were so many families using his pantry that he had to close early on some days and tell people to come back early. morning.

Nearly three years into the COVID-19 pandemic, the contrast illustrates the sharp divisions running through America’s struggling economy. Many affluent consumers are teeming with savings and doing well financially, while poor Americans are cash-strapped and struggling to make ends meet.

The Federal Reserve hopes to slow the economy and contain the fastest inflation in decades with higher interest rates, while not plunging the economy into a recession that would put American families out of work. The painful effects of the adjustment period have already been felt by many Americans, according to the Times.

“Many of these households are moving towards greater fragility that was the norm before the pandemic,” said Matthew Luzzetti, chief US economist at Deutsche Bank.

Although many working-class households lost their jobs at the start of the pandemic, hiring rebounded quickly, with strong wage growth, and multiple government stimulus checks helping families rack up savings in 2020 and 2021.

Faced with 18 months of rapid price inflation, the financial cushions of the poor are rapidly being depleted. According to Fed estimates, American families still had $1.7 trillion in pandemic savings in the middle of this year – about $1.35 trillion was held by the top half of earners and only $350 billion was held by the bottom half.

Far exceeding the pace of around 2% that was normal before the pandemic, prices soared 7.7% through October this year and many people in low-income neighborhoods began turn to credit cards as necessities such as housing, food and auto repair become more expensive.

“With the cost of food, the skyrocketing cost of eggs, people have to come to us more often,” Chambers, of Catholic Charities, told The Times.

The pantry planned to give out 1,000 turkeys and 600 turkey gift cards, along with bags of canned creamed corn, cranberry sauce and other traditional Thanksgiving staples.

Tina Obadiaru, 42, was among those queuing to receive a turkey. The mother-of-seven works full-time caring for residents of a group home, but still doesn’t earn enough to cover the costs for herself and her family, especially after a rent hike last month increased his monthly payment from $2,000 to $2,500.

One of the reasons the Fed is trying to get inflation under control quickly is the burden it places on the poor. Interest rates have risen from near zero earlier this year to almost 4%, with central bankers indicating that more increases are to come.

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