After a sustained period of post-COVID inflation, prices for household goods and food have begun to stabilize between two and three percent. However, if you happen to have dug out an old receipt from a pre-COVID food shop, you may be shocked to see how much more you pay for everyday items and ingredients. This is because the effects of inflation are cumulative and compounding. So, three consecutive years of 2% inflation results in more than 6% cumulative inflation and if you throw in one year of 9% inflation prices really soar. The rapid change in food prices is largely driven by a 2022 spike in inflation, which saw the average grocery bill rise by 9.9% in a single year. While a few … [Read more...]
July 2024 Annual Inflation Falls Again
The U.S. Bureau of Labor Statistics released its July Inflation report on Wednesday August 14th showing Annual Inflation was down from 3% in June to 2.9%. (But since we calculate it to two digits, it was actually 2.97% in June and 2.89% in July.) On a non-seasonally adjusted basis, monthly inflation in June was 0.03% and 0.12% in July. So despite monthly inflation being slightly higher in July 2024 than in June, it was lower than July 2023 (@0.19%) so Annual Inflation fell. Economists had been predicting that the inflation rate would come in at 3.0% so inflation was lower than expectations, but Mr. Market didn't celebrate much (only increasing about 1/2%) but the rally continued upward on … [Read more...]
Navigating High Inflation: Should You Buy, Sell, or Hold Off on Real Estate?
It’s no secret that inflation is high nowadays. While the rate of inflation is significantly lower today than it was in 2022, it’s still sitting at about 3%; which is higher than the FED’s stated goal of 2%. Although, FED Chairman Jerome Powell has hinted that he now considers the range of 2% to 3% acceptable... so he might consider lowering interest rates. But currently, interest rates are considerably higher than they have been over the last decade, which causes higher costs for those interested in buying property. For homebuyers, real estate investors, and brokers inflation is lower than 2022’s record of 9.1% but it is still concerning. Inflation affects various aspects of the real … [Read more...]
Annual Inflation Falls Below 3%
The U.S. Bureau of Labor Statistics released its June Inflation report on July 11th showing Annual Inflation was down from 3.3% in May to 3% in June. (But since we calculate it to two digits, it was actually 3.27% in May and 2.97% in June.) On a non-seasonally adjusted basis, monthly inflation in June was 0.03%. The Cleveland FED had been predicting that the inflation rate would come in at 3.12% so inflation was considerably lower than expectations. Markets took this as a good sign hoping for rate cuts possibly in September and rallied. The biggest beneficiaries were small cap stocks which have been beaten down by higher interest rates. The FED has been hinting that they would … [Read more...]
Inflation’s Hidden Impact on Healthcare: What’s Driving Costs Up?
Healthcare spending in the U.S. is higher than in any other nation. As of this writing hospital services have increased 7.2% over the last 12 months. In 2022, healthcare costs reached $4.5 trillion, with individuals spending an average of $13,493 annually. With soaring prescription drug prices, higher deductibles, and premium increases, costs are getting out of hand. According to Price Waterhouse, "The cost of treating patients is on the rise. The healthcare industry is under pressure from high inflation, rising wages, and other costs, which are only compounded by clinical workforce shortages. Health payers are negotiating pricing with hospitals while provider profit margins continue to … [Read more...]
May Inflation Surprisingly Mild
The U.S. Bureau of Labor Statistics released its May Inflation report on June 12th showing Annual Inflation was down from 3.4% in April to 3.3% in May. (But since we calculate it to two digits, it was actually 3.36% in April and 3.27% in May.) On a Seasonally adjusted basis, monthly inflation in May was ZERO. Bloomberg is making a big deal about that, but what does it really mean? As, I've been saying, beginning in the May-June timeframe inflation typically moderates for the Summer months and then gets really low (or even negative) in the 4th quarter. And that is what is happening. Double Whammy Day The overnight markets were down expecting more inflation so when the report was released … [Read more...]
If Trump Won the 2020 Election Would Inflation Be Lower?
I recently saw this question on Quora and thought it was interesting. It made me think. Does the President control inflation? My first thought was that inflation is controlled by the FED printing money or perhaps by Congress spending money, but how much difference does the President make? Then I read the following response by Valerie Rhea who graciously gave me permission to reprint her response here. Valerie is a Thirty-something PhD economist, and former military pilot, with a law degree. So, she has an interesting background and is well qualified to answer this question. Here is her response. ~ Tim McMahon, editor Inflation is always and everywhere a monetary issue" If … [Read more...]
How Social Security Tax and Inflation Affect Couples’ Retirement
Planning for retirement is an essential part of couples' financial management. As life expectancy increases and healthcare costs rise, ensuring that you have sufficient funds to maintain your lifestyle during retirement has become more critical than ever. Two major factors that can significantly impact retirement income are Social Security tax and inflation. Many people don't realize that Social Security income can be taxable, (which doesn't seem right since Social Security was a "tax" from your income to start with). Understanding how these elements affect your financial future can help you make more informed decisions and better prepare for the years ahead. What is Social Security … [Read more...]
Inflation Destroys More Than Money
Everyone knows that inflation hurts consumers by raising the cost of their purchases and that it hurts those on fixed incomes the most because although their costs are rising, their income isn't. In addition to impoverishing individuals, inflation has several less obvious ramifications. Perhaps the most insidious and detrimental consequence of inflation is the facilitation of more wars. How Inflation Promotes War Prior to the advent of fiat currencies, if a Monarch wanted to wage war, he had to figure out a way to pay for it. If his treasury wasn't large enough to pay for the means of war, the king would have to either raise taxes, or borrow the money, either way there were limits to how … [Read more...]
How Inflation Is Reshaping the Job Market for New Entrants
As you enter the workforce, there are myriad challenges and strategies to navigate — particularly around finding a job in the first place. Inflation rates only complicate this intricate dance you are doing to land a career as a recent graduate or new professional on the scene. Whether you’re sure or unsure about your career path, there are plenty of opportunities to be found in the current job market. Although the rate of rising prices changes things a bit, there are ways to be savvy about the system and land the job of your dreams. The Current State of Inflation and Wages There always seems to be a debate over whether or not wages are keeping up with inflation. However, it’s not always a … [Read more...]
