'We're looking at a downsized America': Kevin O'Leary warns any new house, car and lifestyle you enjoy will be significantly 'smaller' — here's what he means and how you can adjust

But the impact of high rates extends beyond the housing market.

Edmunds reports that borrowing rates for new vehicles in the third quarter of 2023 hit an average of 7.4%, a figure not seen since 2007.

O’Leary summed it up by saying that if you are in your early 20s, your lifestyle will be “about 20% less.”

The blunt reality is that while the headline inflation figure is no longer at 40-year highs, price levels remain elevated. In September, the U.S. consumer price index rose 3.7% from a year ago.

Since the U.S. central bank is committed to using monetary policy to bring inflation down to 2% over time, O’Leary believes more rate hikes could be on the way.

Despite this intimidating financial climate, you’re not totally in the dog house so long as you adjust your finances accordingly. Here is how you can do just that:

'Hot political potato'

In September, the U.S. consumer price index rose 3.7% from a year ago.

“People are looking at the cost of energy, protein, car loans, mortgages,” O’Leary said. “These are complicated situations because of the rate hikes that happened so quickly. But there's no question inflation is not going down — it's north of 3.5%.”

Since the U.S. central bank is committed to using monetary policy to bring inflation down to 2% over time, O’Leary believes more rate hikes could be on the way.

“The Fed may have to increase rates another 25 or 50 basis points as early as January, February. It will be a very hot political potato and it's going to become an issue because it hits you every day at the pump and hits you every day at the grocery store,” O’Leary said, adding that inflation has been “hurting presidential runs on both sides of the aisle” for decades.