{"id":975,"date":"2022-05-09T17:24:52","date_gmt":"2022-05-09T17:24:52","guid":{"rendered":"http:\/\/gpswp.com\/bradyassetmanagement-2\/?p=975"},"modified":"2024-02-02T23:06:55","modified_gmt":"2024-02-02T23:06:55","slug":"inflation-why-the-sudden-concern","status":"publish","type":"post","link":"https:\/\/gpswp.com\/bradyassetmanagement-2\/2022\/05\/09\/inflation-why-the-sudden-concern\/","title":{"rendered":"INFLATION WHY THE SUDDEN CONCERN?"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

While some economists expected that the return to a more normal life would drive economic growth, the strength and speed of the rebound \u2014 and the accompanying increase in inflation \u2014 came as a surprise. Still, some economists are unconcerned and believe it\u2019s more of a blip due to:<\/p>\n\n\n\n

\u2022 Temporary factors causing supply chain interruptions<\/p>\n\n\n\n

\u2022 The drive to quickly reopen the economy<\/p>\n\n\n\n

\u2022 The year-over-year comparisons pit current data against that of a year ago, when many things were shut down1<\/sup><\/p>\n\n\n\n

IS THIS LIKE PAST INSTANCES OF INFLATION?<\/p>\n\n\n\n

People who remember the high, prolonged inflation of the 1970s and early 1980s may be justifiably concerned to hear that it may return to rear its ugly head. Again, some economists point out important differences between then and now:<\/p>\n\n\n\n

\u2022 Several critical factors collided to create the inflation of the \u201970s, among them misguided economic policy, two oil price shocks (remember the OPEC embargo?), and political pressure to maintain low inflation and unemployment in the short term, despite the long-term costs. The lessons learned during that period have led to a better understanding of monetary policy.2<\/sup><\/p>\n\n\n\n

\u2022 Many economists (including Ben Bernanke, former chair of the Federal Reserve System, which is the central bank of the United States) believe that public expectations play a critical role in driving inflation.3<\/sup> If sellers expect high inflation, they set prices higher; if employees expect high inflation, they ask for higher wages. In the extended period of inflation in the 1970s and early 1980s, this cycle became self-perpetuating; today, however, many consumers have no experience with high inflation and are less likely to expect it.4<\/sup><\/p>\n\n\n\n

WHAT CAN YOU DO?<\/p>\n\n\n\n

Prepare, but don\u2019t panic. While some economists don\u2019t see inflation as a long-term issue, there are some dissenting opinions, so it\u2019s good to be prepared.4 As always, I recommend having a written financial strategy that considers your situation, goals, and timeline. In general, cash and fixed income products (for example, CDs) might be more likely to take a hit from inflation, since your money doesn\u2019t go as far. It might be a good time to take a fresh look at your asset mix.<\/p>\n\n\n\n

CONTACT ME TODAY!<\/p>\n\n\n\n

 If you don\u2019t have a written strategy, or if you\u2019d like to revisit your strategy, I can help! Contact me today to get your questions answered or schedule an appointment.<\/p>\n\n\n\n

Sources:<\/p>\n\n\n\n

1<\/sup> https:\/\/www.usnews.com\/news\/economy\/articles\/2021-05-12\/inflation-rises-in-april-at-highest-rate-in-more-than-a-decade<\/p>\n\n\n\n

2<\/sup>https:\/\/www.federalreservehistory.org\/essays\/great-inflation<\/p>\n\n\n\n

3<\/sup> https:\/\/www.thebalance.com\/what-is-being-done-to-control-inflation-3306095<\/p>\n\n\n\n

4<\/sup>https:\/\/nymag.com\/intelligencer\/article\/inflation-coming-2021-rising-prices.html<\/p>\n\n\n\n

Other sources:<\/p>\n\n\n\n

https:\/\/time.com\/6053319\/larry-summers-inflation-worries\/ https:\/\/www.cnbc.com\/2021\/05\/12\/consumer-price-index-april-2021.html https:\/\/www.bankrate.com\/banking\/federal-reserve\/how-to-prepare-your-finances-for-inflation-post-pandemic\/<\/p>\n","protected":false},"excerpt":{"rendered":"

While some economists expected that the return to a more normal life would drive economic growth, the strength and speed of the rebound \u2014 and the accompanying increase in inflation \u2014 came as a surprise. Still, some economists are unconcerned and believe it\u2019s more of a blip due to: \u2022 […]
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