There is a lot of anxiety in the economy right now even though the unemployment rate is incredibly low, and nearly every metric on the planet is looking good (besides elevated price indexes). We went month after month last year with people telling us (and many of them seemed to really, really enjoy saying so, mostly because they are awful human beings) that no one would ever shop again, fly again, or “demand” again. The consumption side of the economy was dead behind a brutal pandemic, they said. And we would all be wise to stop paying our office leases, buy some comfortable couch clothes, order food delivery, get an exercise bike delivered, and sit around the house binge-watching TV and just waiting for it all to end.
But now the tune has changed, a lot. Not that drama and intensity – that is the exact same. It’s just the culprit is now the opposite. Now things are too hot, too much activity, too much demand, and prices are too high. That we are supposed to take advice now from the people who zealously told us the opposite 12-18 months ago is odd to me.
But I digress. Pricing pressures exist in the economy and when folks are not talking about Congressional legislation or Fed policy, they are rightly focused on that. Today I want to explain why they are focused on the right thing (price inflation), but for the wrong reason, and more importantly, with the wrong solution. And yes, with an eye towards the right conclusion in your portfolio.
Off we go …
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