The theme this week on the One Minute Retirement Tip is 2021 Economic Predictions. I’m sharing with you 5 key takeaways from our virtual client event with economist, John Mitchell. 

Today, I’m talking about inflation. John’s comments about inflation were: “Inflation is very low (1.6%)…so when inflation picks up again, don’t be surprised by alarming headlines about surging inflation.”

This makes sense. If the rate of inflation doubles from its current rate - an alarmingly sounding metric - that would be just a 3.2% inflation rate. Hardly scary at all. 

Raising the minimum wage to $15/hour could stoke the inflation fire even more, but the effects are unlikely to be seen in 2021. 

Back in August 2020, I devoted a whole week to the topic of inflation. My opinion from last summer hasn’t changed. 

Inflation is certainly possible in the near future, but unlikely as businesses don’t have much power to increase their prices until the economy really starts growing again. 

Once the Covid recession is behind us, and the economy begins growing again and wages grow at a sustainable rate, inflation may still not be an issue as long as economic growth will be better able to support an increase in prices. 

And we have the Federal Reserve and their ability to manage inflation. Frankly, we’ve seen some deflation - which is a drop in prices and that’s actually a bigger problem to deal with at the moment. 

The answer to the question of whether or not you should  worry about inflation right now is: Probably not. But with our ever growing national debt, I think that’s probably a problem for your future self to worry about. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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