Economic activity, spending capacity, joblessness...
**"Ain't nobody got time for malfunction, especially when it comes to basic pension increases! The 5.3% hike for retirees, effective January 1, 2024, under Elisabeth Borne's government, is still causing ripples. Despite being in line with the law and costing the state a whopping 15 billion euros in just one year, the state of the economy being precarious, it failed to spark consumer spending.
Retirees aren't exactly hoarding their extra cash under the mattress, but they're not splurging it either. The increase, according to INSEE, was like tossing a lifeline to a drowning swimmer, but they somehow managed to tread water instead of swimming charmingly towards the shore. In INSEE's June 18 economic outlook, they termed this 'sterilization' – essentially, the benefits increased at twice the rate of activity revenue, and retirees' spending didn't react as expected to the strong income stimulation.
One reason for this economic declivity (yep, I'm using some big words) is that inflationary pressures are relentless, pushing up the cost of living. Shelter and transportation – essential expenses, are eating up a larger piece of the pie, leaving less wiggle room for discretionary spending. Retirees likely had to fork out more for these necessities, making it hard to splurge.
Moreover, other expense categories like health, personal care, household operations, and recreation saw reduced shares, hinting at shrinking budgets or shifting priorities. The cost of living remained on the rise, with the adjusted CPI rocketing from 2.0% in March 2024 to 2.2% in March 2025. This out-of-control inflation eats away at purchasing power, even with pension adjustments.
In essence, the pension hike may have kept retirees afloat, but it lacked the oomph to propel broader consumption. The inflationary environment and the increasing importance of essential expenses meant retirees couldn't crack open the champagne and celebrate the windfall like a retirement party. Instead, they're treading water, keeping vital expenses covered but not exactly ballin'."
In light of the economic challenges, retirees may choose to seek professional help to manage their wealth and finances wisely, ensuring that they can maintain their essential expenses while also managing inflationary pressures. A careful approach to personal finance could provide a more secure future, allowing retirees to save for unexpected expenses or invest in businesses that align with their interests, rather than merely treading water.
