First, don’t panic. Although it’s true that the stock market went sideways during the 1970s and early ‘80s when U.S. inflation hit a high of nearly 15 percent and unemployment reached nearly 10 percent, few economists or policy makers are expecting a repeat of such extremes.
The Fed’s target to keep rates low coupled with the trillions in government relief has delivered stronger demand, which could provide the foundation for inflation to be higher than we’ve seen in the past decade. However, there are other opinions that the post-pandemic economic recovery will produce a boom year in 2021 but not spur swiftly rising and sustained interest rates and inflation.
The bottom line is no one has a crystal ball to predict the duration or impact of inflation. It’s important to be mindful of the factors at play, but there’s plenty you can do to minimize its impact. Maintain good allocations and investment mixes. When prices rise, revisit your budget and adjust your lifestyle so spending doesn’t follow suit. Understand your Social Security options and use a strategy for claiming benefits to maximize the income possible. Stay in contact with your financial advisor, and make sure you feel informed about the path to financial security.
Wayne Anderman CFP® MBA is the founder of Anderman Wealth Partners, based in the Greater Fort Lauderdale Area, and a registered representative of Avantax Investment ServicesSM. Member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services.
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These opinions are based on observations and research and are not intended to predict or depict performance of any investment. These views are as of the close of business on 06/07/2021 and are subject to change based on subsequent developments. Information is based on sources believe to be reliable; however, their accuracy or completeness cannot be guaranteed. These views should not be construed as a recommendation to buy or sell any securities. Past performance does not guarantee future results.