Hi Friends,
As investors, we pay attention to many economic indicators and statistics. One particularly important metric is the inflation rate. The Fed targets around 2% inflation here in the US, and here is the historic inflation rate for the last 20 years:
With 2020 now over, it is time to see how the inflation rate did... it looks like the preliminary number is coming in at +0.62% for 2020. This is a bit lower than normal, but actually not a bad thing as it means the US dollar has stayed strong and buying power is consistent. On the flip side, a lack of push-cost inflation can lead to higher unemployment and less earnings power for businesses, causing lagging security prices.
With the national debt increasing and continued push for economic and fiscal stimulus to be used, the inflation rate is likely to jump in 2021 as the government gets ready to print some money - hopefully not into hyperinflation territory.
What are your thoughts?
Thanks for coming by,
Brian
It's pretty amazing we haven't been over 4% in decades. Will that change in the near future with all the money printing due to the pandemic?