Inflation spikes again in April amid Iran war
Inflation rose to the highest level since 2023 in April as high oil prices stemming from the Iran war pushed up prices at filling stations and affected supply chains.
“I didn’t have enough money for gas. I arrived late. It was humiliating.”
As transportation costs soar due to the Iran war, Americans are increasingly tapping into their emergency savings to cover everyday necessities.
The data from tens of thousands of employee emergency savings accounts, and the quote above is from one such user, is provided by the account’s provider, a company called SecureSave.
As energy prices soar, nearly 12% of employee withdrawals from SecureSave accounts were allocated to transportation costs at the end of March, an increase of about 35% compared to the same period last year.
With many Americans living paycheck to paycheck and savings rates near their lowest levels in years, household finances are in a “precarious” position, Devin Miller, co-founder and CEO of SecureSave, told USA TODAY.
“What we’ve found is that it’s these little things that trip people up,” Miller said. It’s not necessarily a job loss or a serious health event, but often a very common occurrence.
“We hear anecdotes from people. I’ve had calls before. I drive to work, and I know how much it costs and what my budget is. Maybe all of a sudden the gas prices go up and my budget goes out the window,” he said.
Iran war costs soar
“Prices were rising dramatically, and consumers were not prepared for this,” said Karim Marshall, director of climate and energy policy at the Consumer Federation of America, a nonpartisan advocacy group.
“This is definitely a direct result of the Iran war,” Marshall said. “But the war is only one of several causes. Ultimately, consumers will bear the cost.”
While the war does push up inflation across the economy, Marshall and other observers say it’s just the latest chapter in a years-long cost-of-living crisis plaguing American households.
Emergency savings accounts were developed as a solution to smoothing out the rough waters in household finances, from the large-scale ones mentioned by Miller to the more mundane ones.
“There are widespread affordability challenges across the board for people living on low-to-moderate incomes in the United States,” said Nick Maynard, senior vice president at Commonwealth, a national nonprofit focused on financial security. This group has contributed to account design and usage tracking.
“All kinds of emergencies come up, like car repairs, medical deductions, kids’ uniforms, pets that don’t have the insurance they need, and (families) end up plugging holes in different ways,” Maynard said.
What is an emergency savings account?
Accounts like the one offered by SecureSave have many benefits, Maynard told USA TODAY. Employees deposit the money through their paychecks, so it’s not something you have to actively initiate and it’s automatically transferred. It also provides what he calls a “dynamic” process of paying, spending, and replenishing. This is a more beneficial and achievable approach to saving than trying to get people to put away a lump sum of money all at once.
Funds accumulate in accounts designated as “savings,” reminding users to tap into accounts according to their actual needs and not for luxuries. If you initiate a withdrawal, you will be asked to explain your reason. However, unlike tax-advantaged programs like flexible savings accounts, designated uses are not defined by law.
Since the account is offered at the workplace, some employers may choose to contribute some money along with their employees, or at least encourage their employees to use it. Employers like Delta Air Lines, AutoNation and The Fresh Market are taking full advantage of these programs, and employees are also appreciating the benefits, Maynard said.
The “trickle effect” of personal budgets
Americans have had emergency expenses in every economic cycle, but Miller believes the sense of desperation reflected in some of SecureSave’s data represents a key differentiator this time around.
When asked why he was using funds for transportation, one account holder said, “My car broke down and I had to take the bus, so I was late several times.”
This anecdote and others like it reflect what Miller sees as a “profound and intense” reality.
“What’s even more complicated is missing a shift. When you miss a shift, you make less money. Less money means your budget goes further. This shows how something as simple as an increase in transportation costs and gas prices can have such a trickle effect through a person’s budget.”
Many people told anecdotes about gas prices in their retraction requests, but car repairs were mentioned just as often. That’s not surprising, Marshall said, as the cost of auto parts coming from around the world is also increasing, along with the cost of shipping them around the world.
“For consumers, our real concern at the moment is that most people don’t have much spare cash in their accounts, so they won’t be able to absorb further shocks.”
