I hate to say it, but I told you so….. Also, I don’t really hate saying that…
Remember in March, May, June and July I discussed inflation continuing to rise? Do you remember WHY?
INFLATION – Let’s talk about it...
- What is inflation?
- Inflation is an increase in the price level of goods and services throughout a specific time frame. Basically, it means that a dollar today buys less than it used to. It’s usually discussed in terms of a percentage rate. So, if inflation is 2%, a carton of eggs that was $3 is now $3.06.
- Main causes of inflation:
- Growing economy
- Expansion of the money supply
- Government regulation
- National debt
- Interest rates
- How do we measure up to these inflation indicators?
- Growing economy – check! Been in a progressively growing economy for 10+ years.
- Expansion of the money supply – do you KNOW we have released OVER $9 Trillion
- Government regulation – check! (I don’t have time to address this during this Piatt News)
- Interest rates – check! Really low… all-time low.
- The Feds could correct this, but I HIGHLY doubt they will anytime soon.
- In fact, they announced last week that they will not be moving rates.
- Best way to correct inflation; increase rates. Period.
- As we enter 2022, rates are expected to stay below 4%
- Inflation seems to be FULL speed ahead….
- We have currently reached the highest level of inflation in 40 years!
- It’s not just the housing market. The prices of US consumer goods have been rising faster than at any 12-month period since 1982, according to the Consumer Price Index, released Friday.
- Prices rose 6.8% – the highest annual increase recorded since 1982. Do you remember buying a house in 1982?
Additionally, consumers were really hit hard in these sectors:
- Price hikes in food to the tune of 6.1%
- Shelter rose by 0.5 percent in November, capping off a 12-month period where these estimated housing costs grew by 3.8 percent.
- Like the price of gasoline — which was 58 percent higher in November than it was a year earlier — the prices of cars were a key driver of inflation.
- Used car prices were up 31 percent year over year, and new cars were running consumers 11 percent more than they were the year before.
So, Piatt’s advice; saddle up! Inflation will get worse before it gets better. However, residential real estate will continue to rise, which puts us in a good position as we enter 2022. As access to supplies get worse, prices will increase; therefore, home prices will increase, and we haven’t even discussed the fact that our inventory levels are still at an ALL-TIME LOW; locally and nationally. In fact, the WMLVS reported 0.7 months of inventory in November. I imagine until supply meets demand; we might be in a vicious circle.
