Huan has also had to sell his car after gasoline prices surged.
“When the price of gasoline dramatically surged, the price of everything went up,” he said. “A dozen eggs used to sell for around US$1.80, but then it doubled and tripled before settling on around US$2-3 now.”
A woman is shopping at a local market in Nice, France on June 7, 2022. Photo by Reuters
Van Lam, a Vietnamese restaurant owner in Germany, has experienced the same problem.
“I used to live comfortably spending around 500 euros a month,” he said. “But now, I have to spend between 800 and 900 euros, or even up to 1,000 euros, to maintain that quality of life.”
For Thu Hong, a Vietnamese nail salon owner in the US, things have not been any different: “Prices of everything have gone up,” she said.
US prices of goods and services are currently 8% higher than they were last year, according to a recent CNBC report. Combined with decreased incomes post-pandemic, analysts and everyday people agree that it has gotten harder for folks to get by.
“My gross monthly salary used to be, say, $1,500 before the pandemic,” Huan said. “Now it’s only somewhere between $1,200 and $1,300.”
He added that he used to save around $500 per month before the pandemic and was still able to shop comfortably. Nowadays he finds it hard to save just $200-300 per month, even when he plans his spending carefully.
More Americans are having to use credit cards to make ends meet, and as much as 46% of American credit card holders are carrying debt from month to month on at least one card, compared to 39% last year, reported CNBC. A similar pattern has been observed in the UK, where almost one-fifth of credit card users have missed their payment due dates, as Credit Connect reported.
As a result, people are cutting down on living expenses across the board. Lam has observed that customers at his restaurant who used to spend between 30 and 40 euros on a meal “are now only spending between 10 and 12 euros…and they also come less frequently than they used to.”
Lam said the number of diners at his restaurant has also decreased by around half compared to six months ago. According to Lam, he and his employees used to be busy preparing dishes and serving their customers throughout the day. Now they spend long hours simply hanging around.
Hong said her salon’s revenue has decreased by around 40% recently as more people try to cut unnecessary expenses.
“Before the pandemic, my salon was always full of customers,” she said. “That is not the case anymore. I even had to cut down on the number of employees.”
Business owners overseas like Lam and Hong are suffering as profits from their businesses decrease while inflation and living expenses increase. And they are trying to pay back loans they used to launch their businesses.
“Every month, I have to pay the bank around 1,000 euros as the interest on the money I borrowed,” said Lam. “With costs and this interest, my restaurant business basically hasn’t made any profit over the past few months.”
Similarly, Hong is having to calculate her living expenses carefully to pay interest on her bank loans.
“I have to pay the bank around $5,000 a month,” she said. “Sometimes I have to rely on quick loans to pay these interests.”
In order to deal with the situation, people have had to adapt their lifestyles.
“I started buying things on discount,” said Lam. “For example, if I see a supermarket selling vegetables at a discounted price, I will buy enough for me to eat the whole week.”
This new habit has helped him save cumulatively as he is buying groceries not only for himself and his family, but also for the restaurant as well.
He also cut down on eating out and going out for coffee with friends.
Hong shared that it had been two years since the last time she bought new clothes. She even had to do other part-time jobs to compensate for her lowered profits at the nail salon.
“On days that I don’t have many customers, I ask a friend of mine to supervise the nail salon,” she said, “so I can go out and work as a senior caretaker in the meantime for $35 per hour.”
People like Huan, Lam and Hong will likely have to endure these hardships for some time to come.
Gross domestic product in the US rose by only 1.1% in the first quarter of this year, just half of what economists had predicted, reported CNBC. And Market watch has stated that an economic recession is likely to hit the US this year.
Authorities are trying to target this severe problem. Earlier this month, the Fed approved its 10th consecutive interest rate hike since March 2022. The European Central Bank employed a similar approach for the seventh consecutive time since July 2022, with hopes to slow the inflation rate down and get it under control.
“I hope my business can survive through this,” Lam said. “Now I feel burdened with all these loans and financial pressures on my shoulder.”