Greetings!
As you probably know, the US Consumer Price Index jumped 8.5% in March 2022 from one year earlier. The last time inflation was this high, 1981, a first-class stamp cost 20 cents; today, it’s 59 cents. We can all feel inflation’s effects and we definitely hear a lot about it, but what can we do? Here’s our advice:
Don’t lose your perspective. Stamps do cost more than they did in 1981 but thanks to innovation, the price of many goods and services has actually gone down. You are paying much less to stay in contact with friends, family and customers. Back then, we did not have text messages, e-mails, or WhatsApp. Long distance phone calls were very expensive, sometimes over a dollar a minute. Of course, as you make summer vacation plans, you will notice a definite uptick in prices. Does that mean you should cancel your trip? Absolutely not. It might cost more to fly or drive on your next vacation, but if you can afford it, then do it. Go see the sights and have some fun!
What we are doing. Just like we recommend to you, we are focused on what we can control. Making large changes to investment allocations in reaction to current market conditions is not a wise long-term strategy. As always, we are working with clients to ensure their invested funds are for long-term goals, while keeping enough cash for shorter term needs. Stocks have traditionally been an inflation fighting hedge and continue to be a large part of our portfolios.
What you can do. You can’t control rising prices or what the Fed does, but you can control what you’re doing. Invest in yourself. Ask for a raise or consider raising your prices if you own your own business. In this environment of low unemployment, employees have negotiating power. Additionally, you may want to consider FDIC-insured high-interest savings accounts. According to Ken Tumin, founder of DepositAccounts.com, “Online banks have a history of hiking their savings account rates aggressively as the Fed hikes rates,” while many large banks have plenty of deposits and are less likely to raise their rates.
But think about this: Our world is opening up after COVID. If you are reading this, you survived a pandemic. In the depths of the pandemic, we all said if we get through this, we are going to visit our friends and families, dine out and travel. Don’t let inflation stop you from living. Let’s get out there and have some fun!
For more insight: See this quarter's report from the asset team at Northwest Asset Management - Quarterly Market Guide
Sincerely,
Cass, Bleckley and Megan
**The second winner of our pet portrait contest is Lexie Evans, aka Piglet, seen above. She is the dog of client Bill Evans. I am enjoying painting our clients' dogs and cats. I am branching out to cows. Cass
