New Inflation Numbers, What Do They Mean?

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The Story:

We’ve already seen tremendous inflation in housing, lumber and other areas since Covid hit. But will that soaring inflation continue?

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The Show:

The most recent concern about inflation came from a report from the government on the Consumer Price Index.

We have to laugh when we read that the inflation rate excludes food, gas and housing. It can also be a little misleading to look at recent numbers since the country shut down for a while due to COVID.

As COVID worries seem to be fading away, we could see even more robust month-to-month changes. Also, given the amount of stimulus, we’ve already seen tremendous inflation in housing, lumber prices, gasoline, oil, cars and other commodities.

Some wonder whether the inflation we’re seeing will be short-term or long-term. We certainly don’t see hyperinflation. The target inflation number the government shoots for is about 2% annually. Most signs point to the recent inflation spike being relatively short term or transient.

One reason is due to supply chain disruptions due to COVID and a shortage of workers. The whole economic, social ecosystem has been disrupted over the past year, but in terms of long-term persistent concerns, inflation is a monetary phenomenon, meaning If you print more money, you get more inflation.

A smart way to approach the uncertainty is to keep investing and stay the course. Don’t try to time the stock market or inflation.

Listen to the entire episode or click on the timestamps below to skip to a particular section.

[4:53] – Most recent concern about inflation

[6:24] – What to be concerned about?

[8:07] – Short-term or long-term inflation?

[10:05] – Persistent inflation?

[11:58] Why did stock market drop?

[13:42] – Don’t put all eggs in one basket

[15:55] – Smooth out the ride

[18:40] – Sensible but difficult in practice

 

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Phone: (732) 784-2867

Email: don@donaldcash.com

Website: http://www.donaldcash.com/

About Don:

Donald W. Cash – CPA, CFP® is an independent advisor. Don began his career in 1985 as an accountant after graduating Rutgers University. In 1990 he entered the field of Estate Planning with a concentration in long term care planning. Don has been advising clients in the baby boomer and retirement market for 20 years. He has helped over 1,000 families with their planning needs. He advocates a holistic approach to Estate and Financial Planning as has relationships with other professionals including Attorneys, CPA’s, Mortgage Specialists, Insurance Specialists and Asset Managers. Don is married to Cathy and have 4 children, Carly, DJ, Nick and Tori. They live in Freehold, NJ.

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