Will inflation continue to rise?

Iinflation. It’s almost become a dirty word over the past year and a half. Whether or not inflation will continue to rise until it reaches another dreaded stage – a full-fledged recession – remains to be seen.

There are several factors at play that contribute to record inflation numbers (not the right kind of record). The supply chain continues to lag behind consumer demand, driving up the prices of available products even further. An increase in the money supply from stimulus checks and low interest rates, in addition to investments by the Federal Reserve, have also all contributed to creating the current economic tension.

It affects the pockets of every average American, including those involved in the business sphere. Consumers have a lot less money to spend these days and those running a business struggle to deliver the same value to the customer.

The costs of running a business are increasing, which can affect and possibly annoy customers. We all went to any restaurant or retail store and quickly realized that things were much more expensive than before. Data shows that we all have less to spend and the money we have doesn’t go as far as it used to.

To put it in perhaps too simple terms; this is a difficult time financially for many. Now may be a prudent time to do a financial “checkup” in which you take a close look at your personal or business finances to make sure they can handle tough changes such as rising business costs, increased loan costs or decreased investment. portfolio returns.

If you have debt on your books, getting rid of it as soon as possible should be a priority. Building up additional savings should also be a financial priority. Both would be important steps to protect your personal finances and your business finances from a possible recession.

As a reminder, a recession occurs when there is a general decline in spending. It is less severe than a depression but still hard-hitting and rare. The Great Recession of late 2007 to mid-2009 has been called a once-in-a-lifetime financial event. However, just 13 years later, the US economy is at risk of sliding into another prolonged recession.

While the possibility of a recession still looms, there are some encouraging signs. The Associated Press reported on September 15 that gasoline prices have fallen 26% from their staggering June numbers. President Joe Biden, who has carefully examined the country’s economic roller coaster, has seen a significant increase in approval over the past month.

Recent government action has also helped calm the waves of uncertainty. The Cut Inflation Act, which also incorporated some ambitious climate and health policies, made headlines in August. Additional bipartisan bills to combat foreign competition as well as the cancellation of thousands of dollars in student loan debt for millions of Americans were also touted as major victories for the Average Joe by President Joe.

But as we have all learned over the past few years, things can change – for better or for worse – at an extremely rapid pace, sometimes overnight, as we experienced in March 2020 when the Covid-19 pandemic has gripped the United States. A month into the pandemic, more than 20 million Americans have lost their jobs. Fortunately, things have picked up to some degree since then and, interestingly, many companies are now struggling to fill their workforces as American sentiment towards work has changed.

And to complicate matters further, the Federal Reserve has just raised interest rates again, which could either ease things up a bit or tip the country into recession.

So, to sum up the state of the economy again in overly simplistic terms, things were going the wrong way for a while, but they’re getting a bit better in the last few weeks. However, with major events impacting the nation on the horizon, including what is sure to be a contentious midterm election, the way things go one day could be completely different the next.

Many companies and power brokers on Wall Street are taking defensive positions in anticipation of the worst, a fall into recession. It might not be a bad idea for all of us – business owners big and small, as well as everyday consumers – to do the same, just in case.

Get rid of debt and collect savings.

Prevention is better than cure.

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