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The U.S. economy is full of contradictions, and it’s set the stage for the unique landscape we find ourselves in today.READ THE ARTICLE
Here, you’ll find a breakdown of three questions, which at the core, can explain why we’re experiencing such a strange chapter in time. They include:
📌 If gas prices are plummeting, why is inflation rising? Stores are slashing prices and gas prices are going down. While this might sound like we surpassed peak inflation, new reports say we’ve hit the highest inflation increase since November 1981. That being said, this latest report might have missed the beginning of “the great disinflation”, and the next could tell a more positive tale. On the other hand, the Fed may also have to make a dramatic move to truly get prices under control.
📌 If jobs are growing, why is the economy shrinking? And if prices are rising, why are wages falling? As author Derek Thompson puts it, “... jobs are up, but growth is down; and inflation is soaring, but wage growth is falling.” This is primarily due to the rising costs of material, combined with companies facing high demand, goods becoming scarce and a decline in productivity. Many companies are unable to perform at full capacity due to lack of time for training and lingering effects of COVID.
📌 If consumers are miserable, why is leisure spending on fire? Americans are traveling so much that the hospitality industry can hardly keep up, yet consumer sentiment is at an all-time low. While it’s possible some are getting in their “last thrills before the economy tips”, it’s also possible today’s data is not telling the full story. In this instance? Only time will tell.
Strategize amidst the abnormal: It’s clearly an unusual economy. In that light, it should be even more apparent that this is uncharted territory that will not lend itself to a strategy of market timing.