The Biden/Harris administration is expected to lead the country into an 8% inflation rate according to a Bank of America strategist. Biden is not the third term of Obama, he is the second term for Jimmy Carter. Inflation as far as what you lose in buying power is not your only worry. Do you have a 401k or a Roth IRA? The markets react badly to inflation because consumer spending does not increase in value to match inflation.
So, now you can buy less and your retirement fund will take a beating. What else do you need to worry about? In general, most companies will hand out nominal wage increases but they will be less than inflation. And finally, many companies will be cutting back on labor and you could lose your job. The only upside is that the interest rate on your savings account will increase, but it will be much less than the inflation rate.
Today Zerohedge noted that the potential for CPI (inflation) to move to 4% in a couple of weeks is likely:
…there is a clear risk that the May inflation report published on June 10, “will prove to be an absolute shocker with used cars and trucks up by 50% year over year, and a potential further increases in the yearly increase in the rent of shelter component.”
The current CPI is at 3.8%. And, remember that the CPI does not include food or gas prices or the increase in cooling or heating your home. So if we reach 8% inflation you can add the added cost of food and gas, you could be at 10% or even possibly 11%.
Individual investors around the world are trying to determine where is the most profitable and safest place for their investments. This question has never been as difficult to determine as now.
The markets grew under President Trump based on solid economic policies. The President put in place trade agreements that benefitted the US. He lowered taxes on individuals and corporations making America more competitive worldwide. He pushed for America-first jobs and industries. As a result of his actions, the DOW went up by more than 10,000 points, unemployment was at 3% for 50-year lows and the US GDP reached new highs.
And also today a Bank of America report warns its readers about inflation:
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A new Bank of America report predicts consumer prices will continue to soar for up to four years, as the Federal Reserve‘s preferred measure of inflation hits its highest level in three decades.
In a note on Friday, BofA’s top strategist Michael Hartnett predicted inflation will remain in the 2-4 percent range over the next two to four years.
U.S. inflation has averaged 3 percent in the past 100 years, 2 percent in the 2010s, and 1 percent in 2020, but will annualize at 8 percent in 2021, Bofa predicted in the note.