As usual, there are a lot of news headlines and stories right now surrounding the economy and what may seem like its impending doom! The negative economic news ranges far and wide, from gas prices to interest rates. It is certainly good to be informed, but all of this readily available information and opinions can be stressful and concerning if consumed regularly and at mass. Well, here is another opinion, and hopefully one that can be helpful for how to digest what is to come in the upcoming weeks, months, and potentially years.
In any given economic cycle or market condition, there are many different factors in play that get emphasized and highlighted to relate to and inform on what is going on locally or globally. Even an economist or someone on Wall Street can be in the weeds trying to figure out what is going on currently and how to plan for the future. With that being said, it’s worth the effort to try and limit the focus as much as possible so that you don’t drive yourself into anxiety and panic. So, let’s hone in on one topic here: INFLATION
Inflation is certainly a hot topic currently and also one that is pretty complex. To try and make it simple to understand, inflation is tied to the increase in pricing for typical goods and services that consumers rely on consistently. I am sure we can all relate to the increase in costs that we have seen over a broad range of expenses in our everyday lives recently. To further define inflation, whenever you see inflation numbers as percentages (like the news this week of the inflation report coming out at 9.1%), know that it is referring to the percentage rate of the increase in costs over a period of time. The “powers at be” want the inflation rate to be around 2%, typically. 9% compared to 2% may not seem significant, but it is, and it is extremely significant.
Here is the advice for how to digest the upcoming news cycles around the economy… pay attention to these inflation numbers that come out monthly. July’s number was 9.1%, and for each month moving forward if you follow this you can get a good indicator as to what will be happening economically moving forward based on these inflation reports. In the upcoming months, if the number released is more, then you can expect more negative news to follow with the economy as a whole. If the numbers start to decline from here, then that could be an indicator that the negative has peaked and we could be on the way to things improving.
Hang on though, this potential improvement is not going to happen overnight or in one month's span to where everything is cured or on its way to being “fixed”. We are definitely in for a lot of economic negativity coming up, so if you want to cut out the overwhelming noise surrounding it but still be informed on how the economy is performing you can track this topic instead of tuning into the daily news wire.
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