You may have noticed the words inflation, stagflation, and hyperinflation mentioned in a lot of headlines this week. The three ‘flations (as we call them) have been hot topics lately.
Not sure how they differ? We’ll give you the Reader’s Digest version. Basically, inflation is when prices go up, stagflation is when the economy slows down but inflation and unemployment rates remain high, and hyperinflation is when prices rise at a rapid and dramatic rate.
We dig into those terms more in our latest Gold Watch editorial.
For months, Fed officials have stood their ground on the idea that inflation is transitory. Well, Treasury Secretary Janet Yellen has taken a few steps back. Now she’s saying that U.S. inflation levels will not hit an acceptable level until mid-2022.
On CNN’s State of the Union she said, “On a 12-month basis, the inflation rate will remain high into next year because of what’s already happened. But I expect improvement … by the middle to end of next year, second half of next year.”
However, she did try and downplay inflation concerns and pushed back against criticism from former Treasury Secretary Larry Summers, saying, “I don’t think we’re about to lose control of inflation. It’s something that’s obviously a concern and worrying them, but we haven’t lost control.”
These ongoing inflation issues have caused experts and investors to question if stagflation has returned. The debate has reportedly split Wall Street. While some say it hasn’t arrived yet, others don’t agree.
Chief Equity Market Strategist Phil Orlando told Reuters, “The surge in inflation is not proving to be transitory like the Fed and Biden administration have been telling us. It’s sticky and sustained when we’re past peak growth. That’s stagflation.”
Yet, recent data does indicate that consumer prices rose at an annual pace of 5.4% last month, which is on track for their highest annual gain since 1990.
If people weren’t talking about inflation or stagflation, then there’s a good chance they were talking about hyperinflation.
Twitter CEO Jack Dorsey certainly caused a stir over the weekend when he tweeted, “Hyperinflation is going to change everything. It’s happening.”
Some were quick to disagree in the comments, but Dorsey pushed back, saying “it will happen in the U.S. soon, and so the world.”
Another survey is proving that the current state of the economy is really stressing Americans out. However, this poll found that worries are growing among the younger generations.
A recent AARP survey indicated that more than 60% of American voters over the age of 25 are nervous about having enough savings to support a comfortable lifestyle when they retire.
But don’t forget, there are ways to help protect your retirement savings…like investing in gold. Wade Guenther, a managing partner at Wilshire Phoenix, recently told Kitco News that he doesn’t think the Fed will get inflation under control which means a big price jump for the yellow metal.
If you’re worried about your future, let us help! Give us a call at (855) 905-5317 for a free, no-obligation consultation.