Inflation Through 2025
Expect inflation through 2025 to remain elevated. It may persist longer. Based on extraordinary federal government spending, waves of extra cash will flow into the economy for at least 3-4 more years. Massive injections of extra cash lead to high inflation. Every. Single. Time. Few, if any, exceptions can be found anywhere in history. The Federal Reserve did the absolute wrong policy for 2020-2022 and may be so far behind the asset bubble and inflation it created that a severe correction in asset prices, house prices and interest rates is inevitable.
2022 inflation numbers came in higher than expected across the board. The Biden administration and their lackeys are trumpeting a decline in inflation from more than 9% down to 4%. But that’s not the problem. Although the RATE that prices are increasing has slowed temporarily, the total inflation cost means you have to add those numbers together. Meaning, prices are now 15-20% higher than they were before the Biden administration spendathon began. Check prices of cars, houses, food, restaurants, and about anything else. Has it increased less than 20%. Those items may be few and far between. Many grocery items are up 30% to 50%.
Inflation is our friend according to Joe Biden and spokesperson Jen Psaki
Back in 2022, the WSJ reported, “Food prices are estimated to rise 5% in the first half of 2022, according to research firm IRI, though the level of increases will vary by grocers and regions.” If only it stopped there. But it didn’t. The Consumer and Producer Price Indexes hit year-over-year highs not seen in nearly forty years. As long as President Biden’s economic policy continues on its established trajectory, inflation will continue. It may not be 9% all the time, but it compounds and adds up.
Inflation Moving From Producers to Consumers in 2022 and 2023….and 2024 and 2025
The consistency of such high inflation rates at the producer level indicates upcoming increases in prices to consumers. Quite possibly those increases will well exceed what the CPI report has recently shown.
Now may be the time to shoot for a 10-15% ask to raise your salary or a job change for more money. Oops, the labor market is slowing. Didn’t get your raise to keep up with inflation. Your real income and spending power fell overall then. But remember-inflation is our friend according to the federal government. They can print their way out of that excess spending/deficit. It just cost you a lot–every day and every way. Keep voting for that inflation!
Inflation Data
The “infrastructure” bill contains only about 20% of the more than $1 trillion actually earmarked for infrastructure. The rest of the spending will trickle into inflation over the next 3-5 years. And the government spendathon has only begun.
Two of the biggest concerns for consumers come from food and energy. On a run rate, energy price increases of more than 35% and food price increases of nearly 20% hit consumers hard. And no let up so far in the increased cost of housing such as rent increases coming fast and frequent. But if you rent, you’re seeing rent increases as much as 40%. If you’re buying, you’ve seen the price increases due to FOMO and massive government stimulus.
Housing and Inflation History
Pick up a copy of Winning Mortgage, Winning Home to be prepared for a better buying market to ditch the higher rents. Plan now as opportunity awaits, but may be a short window!
In the past, inflation like this preceded a 2 to 3 year drop in housing prices of 25% or more. After that, prices resumed an upward movement.
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