Inflation | Spending Habits and the Doctor’s Order

Inflation: If you live in America’s society today, inflation isn’t far from your daily experience. A new economic analysis showed that the average American household spends an additional $276 per month. Inflation accelerated to a 7.5% annual rate, the Labor Department reported last week, as consumer demand and supply constraints continued to push prices higher. As always, we are here to help rethink financial goals and plans with the current economic landscape if that is something burdening your thinking these days. Don’t hesitate to reach out.

Spending: Speaking of spending, we came across this earlier in the week and wondered what you thought of it:

When prices are high, it can be tempting to purchase lower-quality items because of the lower price point or sale. But what if it made sense that when you spend, you purchase quality because it lasts. The result is that you spend less because you don’t have to replace the item as often. CFP Carl Richards describes it this way: “In the early 2000s, a few years into my marriage, we were living like poor college students. [My wife] was working as a ski instructor, and I was going to school full-time. We had just had our first child. We didn’t have a lot of extra money, but we loved to ski, and we needed new ski pants. I had my eye on a pair of ski bibs that … were expensive, maybe just over $300. I knew, according to conventional wisdom, I should have bought the cheap pants at Walmart instead. … We saved and saved and saved, and finally, I bought them. Guess what… I still have them.”

What do you think? Purchase quality at a higher price point, knowing that it will last and you will not spend as much in the long term? Or purchase at a cheaper price point?

Financial Thoughts: Financial Advisor Dr. Daniel Crosby shared some things he’s learned about money. We’ll share these a few at a time for the purpose of conversation starters and thinking. What are your thoughts on these lessons learned?

Thought #1: A rise in income shouldn’t mean a rise in lifestyle.

Thought #2: Market corrections come more regularly than birthdays—expect them. (Reference our last two weekly emails on this front.)

Economic Headlines:

• Chicken Wings: The National Chicken Council (yes, it’s a real thing) projected that the chicken wing consumption for Super Bowl LVI will be about the same as last year—1.42 billion wings. The industry group didn’t forecast shortages like those that hit earlier during the coronavirus pandemic, but they did say consumers should expect higher costs. Hopefully, you had your fair share of the 1.42 billion wings yesterday!
• Stocks Retreat: U.S. stocks fell sharply last week after the hot inflation report raised concerns that the Federal Reserve would have to raise interest rates more aggressively than expected.
• Canadian Border: Windsor, Ontario, Mayor Drew Dilkens said at a news conference last week that the Canadian city was seeking a court order to remove so-called Freedom-Convoy demonstrators who are blocking most traffic at a crucial U.S.-Canada border crossing. About 30-percent of annual U.S.-Canada trade passes through the crossing, and traffic disruption has forced auto plants on both sides of the border to pause or reduce production.

Doctors Orders: A growing body of evidence shows that being in nature can profoundly influence one’s health and well-being. No surprise there, right? About 1,000 doctors in the U.S. and Canada are actually prescribing national parks to improve their patients’ physical and mental health. The program gives patients a pass for free entrance to over 80 national parks, national historical monuments, and national marine conservation areas. In future Market Matters, we plan to find out a little more of what your summer plans are to get outside … even if they’re not ordered by a doctor!