Does anyone want to talk about the cost of living/the economy?

[Legssses]

Obviously, whatever happens with the economy over the next few years will impact us all.
I have an interest in current affairs anyway, but have been keeping a closer eye on what the media is saying about the cost of living and the likely impacts of the war in Iran as my financial commitments have the potential to significantly increase.

I think it can be tricky to work out what's click-bait and deliberately scaremongering and what to take heed of.

Do you mean Gary's economics? I think he's got some good points but I think the effects he discusses will be slower than he says

I'm very interested to see how mortgage interest rates pan out. Mine is due for renewal next October (actual change will be Feb '28).

It went up £120 a month last time and if something similar happens again it'll be the difference between whether or not I stay in my hometown or relocate.

My gas and electric bill has just gone up £63 a month for no discernible reason - it's terrifying.

I'm worried about the lack of jobs for young people. Ds3 has just graduated and can't find any kind of graduate job. He's just found a 16 hour week retail job which he is grateful for but the way that the hours are structured means it will be hard to find another job to fit around it. DD graduates next year as a Nurse but says there are very few jobs around for Newly qualified nurses. Struggling to understand how we got to this point and what the future holds. It seems like those who graduated even 2/ 3 years ago are in a lot better position. Also the fact that they will be saddled with 70k worth of student debt, no wonder young people are struggling with anxiety.

Not specifically.

I was thinking more about the medium term impacts of the conflict in the middle east. The knock on impacts of oil, gas, fertiliser disruption and the reduction in shipping generally.

What does Gary's economics predict?

I was thinking about this over the weekend and feel that ultimately we are kind of on a Rollercoaster - no choice but to hang on for dear life.
We are feeling the end result of events happening beyond our control and basically can do nothing about it but firefight from our end.
But in the interim, whoever is in power has the things necessary to make it easier for the country by opening up our own oil and gas fields. Closing our borders and battening down the hatches. Shutting down foreign aid expenditure and all the other things that every government gets bogged down with.
It's just that no political party wants to make unpopular choices so keep kicking the can down the road.

It definitely does feel like a roller coaster.

I'm just finding it hard to know how to manage my own money and financial decisions. I alternate between "batton down the hatches, this is about to get bad" and "ah it's just scaremongering".

We are coming to the end of the fossil fuel age. We’re in the process of catabolic collapse - we don’t have the money/energy to maintain what we have, which is why the roads are in a state, public services are stretched to breaking etc. Like a lottery winner who bought a mansion with her millions, but has no ongoing income sufficient for upkeep, heating it and so on. There will be periodically a temporary crisis (credit crunch, covid etc), living standards will lurch slightly downwards, then stabilise. But each stabilisation will be at a slightly lower level than it was before. This will carry on for a hundred years or so until we reach the new normal which will be a low energy input society, probably with more basic healthcare standards and a much smaller population. Not from some mad max-style apocalypse, but from gradual stair-stepping downwards. It’s happened before (Rome, Incas etc) and will happen again as long as human life continues. Hopefully this time we haven’t caused so much planetary damage that we don’t kill ourselves off this time.

The current AI revolution is going to be transformative for the global economy, there’s a huge amount of amazing progress being made right now. Society is going to see some big changes soon from education reform, vocational reform, careers will change, well being sciences and biotechnology advances are going to make huge impacts on us all.

The cost of living is a problem symptomatic of the old way of doing things. I think it’s reasonable to expect the government will start addressing changes to how the economy works fairly soon, my advice to everyone is hang on in there.

Two very different answers!

It does feel like there's too little money (or too little money fairly distrubuted) to pay for the services we have come to expect @SmallTreeDeepRoots .

What does "hanging on in there" look like on a practical level @Nutmuncher ?

Nutmuncher do you think governments will have to consider the universal basic income soon? sooner rather than later?

It means start using AI as soon as you can and not only for editing photos or making memes, if it can be applied to your work, do it, experiment with it and do research. Keeping abreast of developments in tech, health, the economy actually fosters a positive outlook because you quickly come to realise that today is going to look very old fashioned in the next 3-5 years.

I’m not an AI oracle. However Yes, but how that looks in the next few years depends on how quickly AI is adopted by various industries and whether that means job losses or if job roles adapt to human/AI hybrids. I think we will likely see shifts in how we work before UBI comes in across the board.

3 day work weeks could be the norm for a lot of people and probably something many would prefer over not working at all, robotics will play a huge part in shifting to a UBI economy. It seems very pie in the sky now but the current acceleration of AI progress is exceeding expectations, governments will be having serious discussions behind closed doors about this new era we’re going to transition to.

I disagree about AI because it is too energy and water intensive. We have 20 years of fossil fuels left. We simply cannot produce enough energy from renewables to sustain current modes of living, never mind the increasing energy load of Ai/cloud computing. Fossil fuels have been an absolute gift in terms of net energy. Historically it took 1 barrel of oil to produce 100 barrels. This has fallen as the easy to extract sites have been used up. Solar runs at a ratio of between 1:10 and 1:30. Wind is about 1:5. As energy production becomes more expensive in terms of energy and money in, we will see an inevitable move away from AI - people will gradually become priced out until the model collapses.

LOL the water and energy usage is going to have zero impact on AI, do some research into the very latest news. The world is rapidly changing, for the better.

I'm sick of hearing people say, "Oh of course graduates can't find jobs when they do mickey-mouse degrees like Football Studies." Apart from the sneering, it's just plain wrong. Graduates in pretty much all fields, including obviously vocational ones like nursing and medicine, are struggling.

I’m interested in joining this discussion. @Legssses which financial commitments do you see increasing per your OP if you don’t mind sharing?

I worry that the smallish, but not that small, company I work for won’t be able to afford the investment in AI/technology to keep pace with large competitors. Especially factoring in the cost of all the regulatory requirements etc that are harder for a smaller company to absorb.

I share the opinions and concerns about lack of decent jobs for graduates.

OP I listen to the Meaningful Money personal finance podcast. One of the newest episodes had an interview with an author who mentioned the https://tradingeconomics.com/ website, which shows how 'the markets' respond to world events.

Also a few months ago, after one of the many Donald Trump moments, they talked about how the worst thing to do in response to falling investments was to panic and sell because in time, they had always bounced back, often rising above the losses. So the best thing to do is leave alone and wait. , this had always been the case after the Wall Street Crash, COVID, Liz Truss, the first credit crunch etc.

Because obviously the other thing you must do when investing is never put yourself in a position that you have to withdraw money, always think a couple of years ahead in cash, with the cash flow ladder principle. So if a time comes when you'd normally move some money to cash and your investment has dropped, you wait a few months or if you've a range of investment funds, see if one of the others is in a better position and take from that pot instead.

It's so sad, what a mess we are in, and worse still I can't see it improving.
My AI concerns are still as they were. I have used it a lot over the last few years, but still see its limitations as only a prediction model.

I am interested in this too. It has such a big impact for many.

The jobs market isn't looking great where we are either.

I get it though, I run a v small business that has been doing well so far, but I am on the fence about expansion because:

1 - it will likely take me over the VAT threshold so I will have to pay 20% more on all my sales to the government. That's a lot of pressure for the expansion to go well (plus the actual costs of the expansion)

2 - it seems high risk with so much uncertainty in the economy. My business offers a service that people could cut if household finances got tight.

So some of it is government policy and the hard cut off wrt VAT threshold, which the government absolutely could do something about, and some of it is harder for the government to directly control.

If there really is 'no discernable reason' for your utility bill (or do you mean your direct debit amount?) going up then you need to challenge it.

It will be one of the following, or a combination of more than one reason:

You've changed tariff and the unit rates have gone up.

Something's changed about your usage meaning your bills are growing (extra appliances, higher usage)

You're in debt and the supplier wants you to pay it back/catch up for winter - at this time of year you should be starting to get ahead by a month or two, because you bills will increase come October/November onwards and even if you're 2 months ahead now, in January/February, you'll likely be in debt by a similar amount.

Estimated bills meaning bills and DD amounts don't reflect what you're actually using.

Suppliers increasing the DD without justification although that's not something I've ever experienced and I think happens a lot less than people make out, because when investigated, it's usually one of the reasons above, but a lot of people don't understand the difference between the amount on a utility bill and the amount they pay by direct debit. Your bill should state an estimated annual cost based on your usage, unit rates and standing charge amount. This should be 12 x your DD amount, plus an adjustment for any credit or debt, so that's the first thing to check.

Some of the stuff I am concerned about is quite broad; the reduced flow of oil and gas due to the conflict in the middle east and how this filters through to costs for people commuting, the transport of food and goods, the price of heating homes and businesses and the knock on impact of all of this when we go to pay for goods and services and on household budgets.

The amount of fertiliser that was available during spring planting season was reduced as a significant chunk comes through the SoH, so I expect to see the impact of that on food costs from harvest onwards.

There are other increases in costs that are more specific to me, like the choice to expand the business or not, as per my earlier post.
There are also things that I would like to commit to financially just for enjoyment/pleasure/fun, (cars could do with being changed, a holiday) but the uncertainty is making me pause on them, which i appreciate has a knock on effect as the car dealership and travel agents won't be getting those sales and if we all choose be cautious it will slow the economy.

Thanks @Legssses interesting what you say about food costs etc. I also saw this the other day https://www.bbc.co.uk/news/articles/cq89e771jqlo

…more to do with the drought than purely economic factors but it’s all linked isn’t it.

I think there are lots of people and businesses pausing expenditure due to uncertainty. As you say, that’s not great for the economy more broadly.

Nutmuncher · Yesterday 16:50
The current AI revolution is going to be transformative for the global economy, there’s a huge amount of amazing progress being made right now. Society is going to see some big changes soon from education reform, vocational reform, careers will change, well being sciences and biotechnology advances are going to make huge impacts on us all.
The cost of living is a problem symptomatic of the old way of doing things. I think it’s reasonable to expect the government will start addressing changes to how the economy works fairly soon, my advice to everyone is hang on in there.

Let me guess, you work in computers

I agree.

And I think it's appropriate to point out that climate change are increasingly going to impact how we live. So much uncertainty and polarisation.