Page 14 - Lake Front News: August 2021 Edition

How Much Does That Cost?
By Christopher McIntire, President, McIntire Retirement Services www.mcintireretirementservices.com
Happy August to all!
In case you were living on a deserted Lake Erie Island this year, the price of many items is up significantly over the last year. Gasoline being a major increase as we all have noticed, as well as groceries, lumber and vehicles if you can find one.
The supply chain is one of the main reasons for this. A sudden jump start to the economy thanks to vaccines has led to an unprecedented demand as literally millions of Americans have gotten back to a more normalized way of life suddenly.
Employees that were in-
centivized with extended and
additional unemployment
compensation has also played
a role in disrupting the supply chain. Many of the restaurant and leisure industry workers have
found other work or are waiting for higher wages to lure them back into the workplace.
For those of you on “fixed incomes”, infla- tion can be a real threat to your way of life. The same money coming in from Social Security and pensions monthly buys fewer goods that now cost more. Social Security is looking to get a
substantial COLA (cost of liv- ing) adjustments when it gets announced at the end of third quarter. Early estimates are over 5.0% from what I am read- ing. That will help but it does get offset by potential Medicare premium increases to add salt to the wound.
The adding of so much stimulus, or money supply, has also left us with a lot of mon- ey chasing fewer goods which
is one of the definitions of inflation. We have not had a real threat of above average inflation for years. Interest rates rising are a potential reality to slowing the economy down if it continues to cause inflation to get away from the target set by the Federal Reserve.
Higher interest rates can be good for those with no debt as our savings accounts can finally start to earn something as well as CD’s and bonds paying more interest. Those with debt may pay more in interest and that takes away from what we can spend on discretionary items like vaca- tions and houses, etc.
The other potential risk is that if interest rates get high enough, investors may sell stocks as they can earn a return from bonds and other interest paying investments with less risk. Selling pushed prices down whereas buying pushes prices up.
Real estate has been an asset class that has held up under rising interest rates as higher rents can offset borrowing costs as long as everything stays within a healthy range. With the potential of trillions of more dollars being printed by the pow- ers in Washington, it is going to make inflation a
popular talking point without question.
Investment advisory services offered through Brookstone Capital Management, LLC. (BCM), a Registered Investment Advisor. BCM and McIntire Retirement Services are independent of each other.
Prices are rising
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14 |LeisureLiving August 2021
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