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The Consumer Price Index figures released Friday suggest that inflation may be more of a problem than the Federal Reserve would like to admit. The Bureau of Labor Statistics (BLS) reported Friday that the CPI increased by 0.3 percent in March. Taken together with February's figure, that makes for an increase of a little over 0.7 percent in just two months, which projects to an inflation rate of more than 4 percent annually.

One of the troubling things about inflation is that it can start to generate its own momentum, as prices in one sector react to increases in another. In the case of the March CPI figures, the fastest-rising component was gasoline prices.

Even though crude oil prices started to ease in March, the gasoline component of the CPI has still risen by 9 percent in the past year. This suggests that a degree of price momentum has taken hold with gas prices, and that can quickly infect many other sectors of the economy.

The Fed's position

The Fed's mission is to balance two goals: managing economic growth and keeping inflation under control. Currently, it has dug in its heels on the position that inflation is not a problem, and therefore all its policies have been geared towards stimulating growth. This is why it has maintained extremely low short-term interest rates, and has taken unusual measures to bring down long-term rates as well.

The problem is, the inflation numbers are starting to defy the Fed's position. The Fed will certainly be able to dismiss a couple months' worth of inflation numbers, but if these higher price increases persist, the Fed will have to react.

Reduced spending power

Not only is inflation challenging the Fed's mission of keeping prices under control, but under the present circumstances it could also foil the Fed's efforts at stimulating the economy, because rising prices can smother consumer spending power.

Already, people depending on savings accounts and similar forms of income have seen their earnings reduced to a fraction of what they were a few years ago. Having prices rise while savings rates fall only exacerbates the problem.

Also, average hourly wages have not been able to keep up with the rise in inflation. The BLS reported that hourly wages increased by just 0.2 percent in March, compared with the 0.3 percent increase in inflation. Over the past year, average hourly wages have fallen behind inflation by 0.6 percent.

When consumers can afford to buy less because savings account rates and wages are failing to keep up with inflation, it means less economic growth. In other words, if the recent inflation trend keeps up, the Fed will have not only failed to control price increases, but it could also fall short of accomplishing what it has been chiefly focused on, which is stimulating growth.

More than half of U.S. workers are consistently carrying balances on credit cards and are worried about not having enough in savings to pay for unexpected expenses, according to the PwC 2012 Financial Wellness Survey.

The survey indicated that a third of workers are not currently saving for retirement and more than half expect to delay their retirement. Together, these factors have contributed to a high level of employee distress, with 61 percent of those surveyed reporting their financial situation as stressful.

Debt and monthly bills edge out retirement savings

According to the survey, 33 percent of workers are not saving any money for their retirement. Of these, 59 percent say they have too many expenses to set aside money for future needs. Another 48 percent indicate they are focused on paying off debt rather than saving for retirement.

Overall, about half of survey respondents say they have difficulty paying their household bills on time.

"Competing financial issues are pressuring employees to de-prioritize retirement funding by saving less or in some cases, not saving at all," said Kent Allison, partner and national practice leader in PwC's Financial Education practice, in a statement. "Employees are being forced to extinguish more immediate fires -- such as making a monthly credit card payment or paying a child's college tuition -- over retirement saving."

In addition to those not saving anything for retirement, 40 percent say they are saving less than they did a year ago. Again, the need to pay other expenses topped the reasons individuals have cut back on their retirement savings.

Half expect to retire later

With retirement savings taking a backseat to other bills, 53 percent of workers say they expect to delay their retirement.

For most, the delay is a result of simply not having enough in the bank. Survey respondents gave the following reasons for delaying their retirement plans:

• Haven't saved enough: 60 percent
• Retirement investments have declined in value: 34 percent
• Too much debt: 26 percent
• Need to keep health-care coverage: 21 percent
• Supporting children/grandchildren: 14 percent

The PwC survey also identified a lack of knowledge as a hindrance to retirement. Of individuals between the ages of 55-64 who plan to retire in the next five years, only 51 percent say they know how much money they will need in retirement. Perhaps partially explaining the lack of knowledge, only 19 percent of respondents have sought the help of a financial professional to help with retirement planning.

With the first of Baby Boomer generation now entering retirement, these results highlight a need for workers to quickly reassess their expenses, savings rates and retirement strategy if they are to enjoy their golden years in comfort.

Underwhelming job-growth figures emerged Friday when the Bureau of Labor Statistics released its March report on employment. The U.S. added a net total of 120,000 jobs during the month, with all of this growth coming from the private sector, as budget constraints continue to keep a lid on government employment.

A drop-off in job growth could signal a slowing of economic momentum after several months of encouraging signs, so the question is: Does this report signal a new trend or is it simply an aberration?

Weakening growth

The new employment number is a disappointment because job growth had topped 200,000 in each of the three prior months. Another cause for concern is a loss of retail jobs in March, which may indicate something about the direction of consumer spending.

Weakness in the job market means weakness in the economy, and also has negative implications for savings account rates. A weak economy won't create the demand for capital that would encourage banks to raise deposit rates, and will also do little to make the Federal Reserve reconsider its low interest rate policies.

Employment statistics in perspective

There's no question that the drop-off in job growth is clear, but does it mean anything? A look at the history of monthly employment numbers shows that they are often wildly erratic. Sudden jumps or dips in job growth are common, especially in the early stages of an economic recovery.

What matters more are long-term trends -- streaks of a few months of low or high employment, or continued movement of the numbers upward or downward. It's too early to tell whether March's disappointing job growth means that the momentum that had appeared to be growing in recent months has truly been broken.

Reasons for nervousness

While the dip in employment growth might be a one-month aberration, the news was met with a considerable amount of concern for a couple of reasons:

1. A sense of deja vu is inevitable with the employment numbers starting to fall into a pattern similar to a year ago. In early 2011, employment growth topped 200,000 jobs for three straight months. Suddenly, though, job growth dropped to 54,000 in May, and didn't exceed 100,000 again until September.
2. Gas prices seem to have people on edge. Rising gas prices eat up money that could be used for other purchases, choke off growth by making prices generally higher, and restrain consumer spending by eroding confidence in the economy. It doesn't help that a spike in gas prices seems to have played a role in last year's sudden slowdown of growth.

Still, the key question has yet to be answered: Is this a new trend or just an aberration? April's job figures, due to be released on May 4, may tell the story.

Saying it will help "crush" student loan debt, a new online bank is offering a different type of rewards program. The SmarterBank checking account is being marketed to those with student loan debt, promising "SmarterBucks" that can be automatically applied as extra principal payments to those loans.

While critics contend that encouraging spending as a means to pay down loans is counter-intuitive, SmarterBank says the program represents a sensible way to reduce student loan debt when used properly.

Rewards re-envisioned

An initiative of Boston-based financial aid firm SimpleTuition, SmarterBank is the latest entry to the online banking marketplace. In addition to its free checking accounts, the bank also offers free debit cards, ATM access at 40,000 locations and online bill pay. Banking services for SmarterBank are provided through Bancorp, a commercial bank that administers private label programs for its affinity partners.

According to SmarterBank, its SmarterBucks rewards program is what sets it apart from other online checking accounts. While members can enroll in SmarterBucks separately, the bank advises combining the program with its checking account to maximize earning potential.

The SmarterBucks website lists several ways account holders can earn rewards:

• 0.5 percent back in SmarterBucks for purchases up to $100
• 1 percent back in SmarterBucks for individual purchases in excess of $100
• 5 percent back in SmarterBucks for certain special offers
• Opportunity for family and friends to contribute SmarterBucks to an account

Account holders can apply their SmarterBucks to any student loan, and the rewards associated with the checking account do not expire. In addition, payments will be automatically made from the SmarterBucks account to the designated student loan.

"Total student loan debt currently stands at $1 trillion and growing," said Kevin Walker co-founder and CEO of SimpleTuition, in a press statement. " Add to that a poor job market and it paints a challenging picture for graduates and our society as a whole. We built SmarterBank as a revolutionary way for students and graduates to start chipping away at their student debt."

According to SmarterBucks, paying an additional $10 a month toward a 10-year $8,500 loan at 6.8 percent interest can save up to $1,500 in interest costs and shave 16 months off the repayment period. Extra payments of $50 a month can reduce the repayment time by 51 months and save up to $5,000 over the life of the loan.

But the key for users, just as with other rewards programs, is to allow the rewards to build up over the course of normal spending. If users instead choose to spend more for the sake of the rewards, that money would have likely been better spent simply purchasing the rewards -- or, in this case, paying down the debt -- directly.

Is money really as difficult to discuss with children as the facts of life?

A new study by T. Rowe Price suggests that many parents have trouble talking to their kids about financial matters. For example, 28 percent of adults questioned for the Parents, Kids & Money Survey said they find it difficult to talk to their children about investing -- a percentage similar to the 29 percent who find puberty a difficult subject to broach.

Here are some of the other disturbing highlights from the study:

• Nearly a quarter of all parents seldom or never discuss financial matters with their children.
• 77 percent of parents are not truthful about money at least some of the time.
• Less than half of all parents give their kids a regular allowance.

This survey should act as a signal to parents to start teaching children more about money, and the basics are an excellent place to start.

Four financial essentials to discuss with kids

At minimum, there are four financial lessons parents should be sure to teach their children:

1. Setting savings goals. The great thing about this topic is that parents can start with something simple and specific in the child's life, like saving for a new toy. As the child matures, parents can start to explain how they are continually juggling an ever-changing set of goals in order for the family to have basics like a home and a car.
2. Managing household expenses. Parents should list all their monthly expenses, and show their children how all the things they may take for granted -- electricity, water, cable television, etc. -- have to be paid for on a regular basis. Explaining how this is done, and how to manage a checking account to provide for these things, will not only teach children fundamental life skills, but it may give them more of an appreciation for everything their parents put into the household.
3. Long-term planning. As a child enters high school, it's natural to start talking about colleges, and financial issues should be a major part of that discussion. Parents can explain how they plan on affording college, and then broaden the lesson to talk about other forms of long-term planning, like retirement saving.
4. Using credit responsibly. Around age 18, children can expect to start receiving credit card offers, which makes this an important time to talk about how credit terms work, and the importance of living within their means.

Naturally, there are many more topics parents could tackle, but the lessons above are crucial for enabling children to manage their affairs successfully once they become adults.

Whatever financial topics parents choose to discuss, perhaps the most important thing is to be truthful. The T. Rowe Price study suggests that a significant number of parents have a hard time being completely forthright with their kids about money matters. But in that effort to avoid an awkward conversation, those parents may be really shortchanging their children.

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