As an experienced private equity investor, Mark Hauser is well-versed in the effects of continued inflation on customers and the general economy. Relentless inflation continues to impact many sectors in the United States, including the gas pump and grocery store. Also, other consumer commodities retail at a high price due to supply and demand issues.
The service providers have progressively increased prices due to the skyrocketing overhead costs. Other relevant indicators indicate a constant decrease in customers’ overall buying power. According to Mark Hauser, inflation may not moderate any time soon.
Inflation Rises in Spring 2022
The United States Commerce Department denoted that the average customer spending in March was higher than projected. As a result, the country’s economic activity rose by about 1.1% in March. This increase was primarily due to the surge in food and energy prices. On the contrary, car expenditure decreased for the second consecutive month.
Expect Fed’s 2022 Rate Hikes
Labor market and consumer spending figures indicate that consumers should anticipate an annual inflation rate. The overall prices are increasing at the sharpest level ever recorded since the 1980s inflation. Luckily, Fed has undertaken suitable measures to counter the inflation rate. For instance, Fed raised the interest rates by about 25 basis points in March 2022.
Factors Causing Inflation
Mark Hauser says that the increased price of products and services comes from an overall reduced supply or higher demand than average. However, several market developments and economic factors can impact both trends.
The Impact of COVID-19 Pandemic
The Coronavirus pandemic’s economic slowdown led to inflation across the globe. The U.S government’s several rounds of stimulus payments, consumers’ release from lockdowns, and low Fed Reserve interest rates led to high demand for products and services. Due to this aspect, it was difficult for the present good inventories to sustain the customers’ buying rage. Increased product prices and shortages were reported across the country on specific items.
Pros and Cons of Inflation
Mild inflation is perfect for economic prosperity because it catalyzes economic growth. According to Mark Hauser, companies should consider undertaking capital investments during inflation in projects they would otherwise postpone. For instance, you can invest in gold and other precious metals.
On the other hand, sustained inflation leads to an increased cost of living, an increased retirement account contribution, costly variable-rate debts, and the risk of excessively high inflation.