Episode 137: Is Inflation Transitory or Here to Stay?

Today’s Prep:

Gas prices are up, buying a car is much more expensive, and groceries cost more. Is this something you should be concerned about? David shares more information about inflation and whether or not he thinks this is transitory.

(Click the featured times below to jump forward in the episode)

Equipping Points:

Is today’s inflation here to stay? What can we learn from the latest numbers? After meeting with clients about inflation where it was a large part of the discussion, David shares with us what we need to know about the recent inflation activity.

Is there anything that we can glean from the monthly data that comes out to help us in structuring our portfolios and getting our inflation expectations right? How can we tell if these are temporary changes or if this inflation is here to stay? Things like used car prices, fuel prices, and motor fuels in the consumer price index (CPI) are indicators of what to look at. Some prices are flexible and some stay up once they go up. Others are based on supply and demand. David shares which current prices he thinks are temporary.

What we want to see is a slowing down of the prices that have been going up. As we see that, we can be more confident that we’re on the right track. Stocks tend to perform pretty well with moderate inflation, whereas very few things perform well with significant levels of inflation. Retired or not, it’s a pretty good environment to have at least your normal allocation in the stock market.

David thinks this inflation is transitory and doesn’t think it will be like what happened in the 1970s. Inflation would be a big thing if that were to happen again, particularly for those on a fixed income via Social Security and pensions. But David doesn’t see this going that way. Keep watching on a monthly basis and reach out to your financial advisor to make sure your financial plan is appropriately set for inflation, now and in the future.

Listen to the entire episode or skip ahead to hear more regarding inflation.

[1:40] – Is inflation a big deal?

[3:42] – What are the latest numbers telling us?

[5:15] – How do you decide if it is temporary or permanent changes?

[11:40] – What can we do with this information?

[14:18] – Should you be worried?

Today’s Takeaway:

Stocks tend to perform pretty well with moderate inflation. Very few things perform really well with significant levels of inflation.”

– David Dickens

Additional Resources:

PODCAST: What Should I Do Now To Reduce Future RMD Taxes?

PODCAST: What’s Your Retirement Income Literacy?

PODCAST: How Much Should You Invest in One Stock?


More From David:

The host: David Dickens

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