Rent, food, gas, raises: What’s ahead in 2016

Wondering how you will fare financially in 2016? Here are experts’ predictions on what next year will hold for financial matters close to home: raises, rent, gas, food and health.

WILL YOU GET A RAISE NEXT YEAR?

Maybe.

Wage growth has been perhaps the job market’s biggest weakness since the recession ended. Pay increases have been slow and uneven, highly dependent on field of employment. And for many, the increases have not been enough to keep pace with the cost of living.

In November, average hourly earnings climbed 2.3 percent from a year earlier, according to the government’s most recent report. But that is only about two-thirds the roughly 3.5 percent typically seen in a strong economy.

Many economists are optimistic that Americans’ pay will start growing faster soon because hiring has been good and layoffs have been low. But that’s been the case for a while, and wages haven’t taken off yet.

Joseph LaVorgna, chief U.S. economist at Deutsche Bank, is not expecting major gains ahead. He notes that measures that include a broader mix of compensation beyond hourly wages show there’s even less growth in pay than it seems.

“I’m not convinced things are going to grow as much as I would like them to,” he said.

WILL YOUR RENT GO UP?

Yes, most likely.

It’s been a tough few years for U.S. renters because demand has outpaced supply, causing rates to rise.

Rents increased 4.5 percent in October, 5.3 percent in September and 6.2 percent in August, according to real estate data firm Zillow. The median rental payment nationwide was $1,382 in October, roughly 30 percent of the median U.S. family income and high enough for the government to consider it financially burdensome.

Over the past decade, the number of renters spending over this threshold on rent has jumped from 14.8 million to 21.3 million, or 49 percent of all renters.

In Orange County, rent is twice the national average by Zillow’s math: $2,770 a month, up 4 percent this year so far.

Apartment trackers Reis Inc. and Real Answers put the average monthly apartment rent in the $1,724 to $1,867 range. Rent accounted for 48.8 percent of the median household income for the combined Los Angeles-Orange County metro area, Zillow reported.

More rent increases are anticipated.

“Rents are expected to rise in virtually all major cities in 2016,” said Hessam Nadji, senior executive vice president with commercial real estate services firm Marcus & Millichap.

Some small consolation: While rents will rise, the pace of rent growth will slow modestly from the exceptional levels set in 2015 as new construction creates more housing competition, Nadji said.

WILL GAS PRICES STAY LOW?

Yes, most likely.

Oil prices have plummeted over the past year, a result of high global supplies and weaker demand than expected. U.S. drivers are paying less than $2 a gallon on average for the first time since the Great Recession. Seasonal factors and volatile oil prices will push prices up and down throughout the year, but overall, prices are expected to remain low compared with recent years.

The Energy Department forecasts an average of $2.37 a gallon next year, which would be the lowest annual average since 2009.

Tom Kloza, head of energy analysis at the Oil Price Information Service, said drivers should expect lower lows and higher highs at the pump in the year ahead, but he doesn’t expect the price of a gallon of gasoline to go above $3 at any time in 2016.

“Nationally we are looking at a year that is very similar to the year we are ending,” Kloza said.

But Californians shouldn’t rejoice just yet. The average price of gasoline in California is always higher than the national average because of high taxes and a unique blend of fuel.

In the past week, gas prices in Orange County have risen more than 16 cents because of partial shutdowns at two California refineries and a drop in imports of refined gasoline and gasoline ingredients.

A Tesoro refinery in Carson and a Chevron refinery in El Segundo have been partially shut down since Nov. 23 and Dec. 12, respectively.

Allison Mac, a petroleum analyst at Gas Buddy, said gas prices will be close to $3 a gallon in January before the supply issues are addressed and prices start to fall.

WHAT ABOUT FOOD?

New year, same dish.

Food prices should rise at a rate near the historical average, according to the USDA’s forecasts.

The United States Department of Agriculture’s Economic Research Service anticipates that the price for food will be up 2 percent to 3 percent for 2016, same as in 2015 and in line with the 20-year historical average of 2.6 percent. That includes food eaten at home and in restaurants.

Annemarie Kuhns, an economist at the ERS, said certain food prices were off this year because of unusual events, such as the avian influenza that led to the deaths of millions of birds and sent egg prices up roughly 15 percent. She and fellow economists anticipate that these prices may level off in 2016, assuming cooperation from Mother Nature.

WILL HEALTH INSURANCE COST MORE?

Probably.

People buying their own coverage through the exchanges created by the Affordable Care Act should see premiums go up faster in 2016 than in previous years, said Cynthia Cox, associate director of health reform and private insurance at the Kaiser Family Foundation.

According to Kaiser research, if you do not shop around and let your plan passively renew, the premiums for the lowest silver-level plan – the most popular on the exchange – will increase 15 percent on average next year. If you are willing to switch, premium increases are expected to be zero to 1 percent. This happens because the exchange is set up to encourage shopping around.

These increases apply only to people who are receiving subsidies to help pay for the insurance. For those who do not, the increase is expected to be 6 percent.

Premiums for Covered California policies, which cover families and individuals who don’t have insurance through an employer or the government, will rise an average of 4 percent in 2016.

Cox said shoppers should update personal information, such as changes to family size or income, which can affect what they pay.

“It’s very important to go back online and shop every year,” Cox said. “This is still an evolving market; there are new insurers coming in and other insurers leaving. The only way to find (the best price) is to go online or navigate through a broker.”

Premiums for employer-sponsored plans increased about 4 percent this year. And while Kaiser does not forecast employer-sponsored plan price changes, it does not anticipate any unusual hikes in health care costs that tend to push up insurance premiums.

However, employees may end up paying more out of pocket for deductibles, co-payments and other expenses they are responsible for, depending on the employer’s plan.

Staff writers Hannah Madans and Jeff Collins contributed

to this report.

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