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Two men use a truck filling station at a gas station in Aurora, Oregon, on April 7, 2026. – Jenny Kane\/AP <\/p>\n Two men use a truck filling station at a gas station in Aurora, Oregon, on April 7, 2026. – Jenny Kane\/AP <\/p>\n
Here\u2019s something no American wants to hear: Prices are surging again, and uncomfortably high inflation could be with us for quite some time.<\/p>\n
Inflation has been a thorn in the US economy\u2019s side since 2021, and though price increases have cooled off dramatically in the past few years, the problem never really went away: Inflation still hasn\u2019t returned to pre-pandemic levels, and Americans haven\u2019t yet adjusted to higher prices. That\u2019s why the cost of living has remained Issue No. 1 for voters in poll<\/a> after poll.<\/p>\n This oil price shock almost certainly will not translate into the 9.1% four-decade high inflation that the United States painfully endured in 2022. But key differences between the situation today and four years ago could make this latest war-induced inflation spike very difficult to bear.<\/p>\n The US economy has been remarkably resilient despite everything thrown at it this decade \u2014 a pandemic, two wars, a historic inflation crisis, tariffs\u2026. It\u2019s tough to shake a $31 trillion titan. That\u2019s why most economists agree the oil price shock from the Iran war probably won\u2019t end in a recession.<\/p>\n But the economy doesn\u2019t need to be in a recession to grow painful \u2014 just ask the millions of low- and middle-income Americans who have struggled to make ends meet over the past several years.<\/p>\n Unlike 2022, when savings accounts were still padded by government stimulus, an emergency pause on student loan debt repayments and other pandemic-related safety nets, in 2026, many Americans are borrowing money to get by \u2014 and they\u2019re finding it harder and harder<\/a> to keep up with those payments.<\/p>\n In February, Americans\u2019 savings rate (savings as a percentage of after-tax income) was 4%, the latest Commerce Department data showed. In February 2020, that rate was 7.5%. And heading into the pandemic-era inflation burst, those piggy banks were plump (in part due to federal stimulus payments, refinances, and a sheer pullback of spending): The savings rate was 21.6% in March 2021, when inflation was starting to accelerate.<\/p>\n \u201cHouseholds do have less of a cushion now than they did two, three years ago,\u201d Augustine Faucher, chief economist at PNC Financial Services Group, told CNN in an interview. \u201cThat means that this higher inflation is going to pinch more than it would have.\u201d<\/p>\n Layer on top of rising prices: a frozen housing market, immigration restrictions that have exacerbated childcare and health care shortages, the elimination of key social services and historic tariffs \u2026 that\u2019s a lot for folks to bear.<\/p>\n Now, add surging gas prices. That\u2019s tipping some folks over the edge.<\/p>\n Story Continues <\/p>\n Despite how much Americans hate this economy<\/a>, it\u2019s had one saving grace: The average annual paycheck growth has exceeded the average rate of inflation for about three straight years.<\/p>\n Some economists \u2014 including Federal Reserve Chair Jerome Powell \u2014 argued that sentiment would eventually catch up to reality once Americans adjusted to higher prices, and paycheck gains padded their bank accounts.<\/p>\n That theory took a big blow to the noggin in March.<\/p>\n Annual wage growth shrank to just 3.5% on average last month, and annual inflation surged 3.3%. In one fell swoop, years of progress on inflation was set back, and Americans\u2019 pay gains were practically eaten away.<\/p>\n \u201cWe\u2019ve had a couple of years to try to heal and repair\u201d from the pandemic-era inflationary burst, said Heather Long, chief economist with Navy Federal Credit Union. \u201cTo reverse that is painful.\u201d<\/p>\n