How Does Ongoing Inflation Rank Among America’s Problems Right Now?

There are many burning questions on the minds of Americans these days. With all the gut punches that we’ve been taking in the past few years, bad news is the norm and good news…well, try to find some.

Money with arrow pointing down representing ongoing inflation

When it comes to our health, the way we socialize, the kids and schooling, politics, human rights, women’s rights, civil rights, war, and yes, I have to say it, the terror we face every week from gun violence, inflation may seem like an unimportant back burner issue. But it’s not. So how does ongoing inflation rank among America’s biggest problems? And what can we do to prepare for it?

The “Good News Bag” Is Empty Right Now

Although I am just chock full of opinions and suggestions—and I do some yelling from the rooftop on many kinds of subjects when it comes to all of the endless and shocking news we share daily—it’s not my place to talk about them here. What I do here is give my opinion on money and your financial life. That’s my “bag” and what I am going to share today isn’t good news for you either. That bag is empty.

It’s time to face the truth about inflation and here it is: Inflation isn’t going away any time soon.

Numbers Can Lie, But This Time They Don’t

On the surface, financially speaking, some things are actually looking up. If you got your old job back, or even a new and better one, your pay has gone up, and life is looking more and more like it did in many ways like back in ancient 2019 times, you may think that “happy days are here again”. Try telling yourself that when you are pumping gasoline at $5.00 a gallon or more next time you fill up!

It’s a very challenging time right now with inflation,” U.S. Labor Secretary Marty Walsh told Yahoo Finance Live last Friday. When politicians and bureaucrats speak, it’s sometimes best to decode what they say. This time there’s not much to figure out. If the Labor Secretary says it’s “challenging” he means it’s pretty bad out there.

When the inflation numbers for May 2022 come out this week you will probably already have figured out what it means to you. It’s another gut punch, empty bag, or whatever bad metaphor you want to use. Putting it simply, hold on because it’s still a bumpy ride ahead here.

Inflation Is Peaking?

Don’t hold your breath even though ongoing inflation does and will have to peak at some point. It always does and it will, but when and what does that mean for you? The reality is that the nasty inflation of 2021 and 2022 is here to stay at least into 2023. But, and it’s a big one here, some are even predicting that we may be looking at inflationary pricing for years to come!

Some policymakers seem to want and be rooting for some kind of “mild” recession to hit us all and that may cool down inflation. But is that a good thing? Recession, no matter how mild, means job cutbacks. When a recession hits, generally it’s accompanied by rising unemployment.

In a recession, if a person is able to keep their job, they probably won’t be completely confident in spending their money on things like TVs, cars, homes, and services because of all the negativity that accompanies a recession. In a recession, consumers slow down or even stop spending.

Our economy is very dependent on consumer consumption of goods and services and folks tend to “hunker down” during recessions because they fear losing their jobs.

Another bad sign is that interest rates get weird and go up on just about everything except possibly what you earn on your money. That’s starting to happen now and the Fed isn’t going to back off on their plan for more rate hikes this year and into next.

How to Prepare Now for What Might Happen?

I may sound like a broken record (did I just refer to something that about 50% of you have no idea what it is I am talking about here?) when I say it, but here goes:

#1 is to build up your emergency funds

That should be a top concern during a recession. You need to stay on top of your bills and ensure you have a reliable source of income. Start right now and hope you never need to use it.

In the past, I have recommended saving up an emergency fund of three to nine months of your mandatory expenses, depending on your budget. A money market account is a good place to have your money and using an online account is paying the best rates these days (if about 1% knocks your socks off, that is). They’re perfectly safe and can be linked to your checking account no matter where it’s at and moved easily if you need it.

#2 is to create extra income

Look at all of your skills and resources and consider additional side hustles and part-time jobs to supplement your income now. There are over 11 million service/retail jobs out there that are unfilled despite low unemployment rates overall and getting even a few hours a week is a good idea.

Is there a recession on the horizon? They simply are a part of the economic pattern and after a long period of growth they always come, even if they are “mild”. Regardless of when the next recession hits, it pays to be ready.

Don’t Expect Prices to Drop

Prices will never go back to the way they were before the pandemic. Why? Here’s the short list.

  1. There is a shortage of skilled workers to meet the needs of post-pandemic businesses and that has led to increased wages that are being passed on to consumers.
  2. Supply chains are still stuck and the cost of labor and transportation continues to go up, making everything more expensive.
  3. There are semiconductor production shortages that may take years to correct.
  4. Oil production and rising prices above $115.00 a barrel, almost double pre-pandemic pricing (or higher) and that may become the new normal.
  5. The price of natural gas has skyrocketed to its all-time level. Gas is used not only for heating, but in the manufacture of many items like all plastics which you use and it will drive the cost up for those items to record-breaking numbers!
  6. Corporate greed: It’s more than profit when you take advantage of pent-up demand and pass along every drop of the increased costs to consumers. In many areas of commerce, it’s caused rampant inflation out of the 40-year cycle we had previously lived through.

Final Thoughts

It’s an unpleasant subject to talk about (as many are these days), but ongoing inflation affects every one of us every day, just as the other life and death issues do. Is it the same exactly? Of course not.

So where does it rank on the list of America’s problems?

My answer is that although it isn’t an immediate threat to life and limb the way a gunshot might be, it is a slow painful death to your health, wallet, and life if you aren’t truly prepared to deal with it now and in the near term into 2023 and even further!

While ongoing inflation can lead to recession, and that may lead to food and shelter and health shortages for many, you can prepare for it.

Just like you fight for your rights and you oppose oppression and war and all the evils of the world, fighting inflation is a real issue just like those others.

So this week, when you get the news about inflation, start thinking longer than just this month or this summer or even this year. Make a plan for now and for your future. The time to start is always right now.

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