Report on Inflation

Below mariner has composed fiscal details from several sources. Inflation is like riding a roller coaster where a person is rolling uphill if they are lucky and at the same time rolling downhill if a person is not lucky. Mariner remembers during the 17% inflation in the seventies that ambitious people would buy and sell their homes every six months, ending up with million dollar homes. On the downhill roll, the purchasing power of family income drops quickly in value.

֎ Consumer prices rose 7.5% over the last year, the highest since February 1982.

֎ Some of the steepest price rises in January were in energy – a 9.5% rise in the price of fuel oil and 4.2% rise in electricity costs.

֎ Prices rose for apparel (1.1%), car insurance (0.9%), and restaurant meals (0.7%).

֎ Rents continued pushing upward (0.5% for rental properties which in effect creates a floor to keep inflation from easing.

֎Prices for used cars and trucks were up 40% in January, compared to the prior year.

Wages are not keeping up. Average hourly earnings rose an impressive 5.7% over the 12 months ended in January — but that is a lot less impressive when considering that consumer prices rose 7.5%.

The effect of the Infrastructure Bill that Congress finally sent to the President for signature will represent the first raise for labor in many years – not due so much to the empathy of politicians but because of a labor shortage as the nation’s infrastructure gets a thorough overhaul. Hiding around the corner is the looming impact of climate change and global warming. The further destruction caused by climate change plus the need for even more workers, will keep inflation moving.[1]

Finally, the shortage of homes and, in particular, low income housing, will drive home purchase prices well above the inflation rate.

By no stretch is mariner a financial advisor. He is concerned, however, that individuals who have most of their savings in banks may be discouraged at the lag of interest income behind inflation. Today, a typical savings account pays .0005% in interest income. As of the writing of this post, inflation is just warming up at .07%. The S&P 500 product, mostly a bond market, may offer slightly better interest for the average investor. Definitely visit a financial advisor for advice.

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Readers should take note of a significant bill that left Congress for the President’s signature: Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act. One of the reasons many sexual assaults never made it to the press or courts was the practice of settling out of sight. Called ‘forced arbitration’, employees were forced to enter ‘the secret room’ where settlements were arranged out of sight, non-disclosure agreements were signed and court actions were avoided.

Ancient Mariner

[1] Browse broadcasting websites to find two or three documentaries about a disappearing Miami. Besides daily high tide flooding, venture capitalists are buying up higher elevation, cheap properties (AKA low income housing) and leaving the destitute homeless.

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