SLC Chapter 13 attorney Rulon T. Burton and Associates understands the value of every dollar. As a firm that is familiar with filing bankruptcy in Utah, we have some insight into what the financial outlook is for 2022.
Inflation affects the value of money; when the cost of goods steadily increases or inflates, money loses its value. As of September 2021, inflation was recorded at 5.4% higher than September 2020. But what affects the value of a dollar, and how will it look in 2022?
Who’s Tracking Inflation?
The Bureau of Labor Statistics (BLS) analyzes the economy of the United States. The BLS gathers data on employment, wages, and fluctuations in the price of goods and services across the nation. Their homepage features a ticker with stats on the current Consumer Price Index, the unemployment rate, and the Producer Price Index.
Consumer Price Index (CPI)
Calculated monthly by the Bureau of Labor Statistics, the CPI is the average a consumer will pay for goods or services. Previous and current prices are averaged and used to help determine the cost of living for consumers in certain demographics:
- Retirees
- Self-Employed
- Un-Employed
- Professionals
- People using government assistance (food stamps, Temporary Assistance for Needy Families, Welfare, Medicaid)
The Consumer Price Index process has been ongoing since 1913, and it calculates costs from the following industries:
- Apparel
- Communication and Education
- Food and Drink
- Housing
- Medical Care
- Recreation
- Transportation
- Miscellaneous
Producer Price Index (PPI)
Also calculated and reported monthly by the BLS, the Producer Price Index is the average price for wholesale producers to purchase goods before selling them in the retail market. The data tracks costs of materials in industries such as agriculture, construction, and mining. When these costs increase, they’re often passed on to consumers.
As the BLS continually tracks the cost of living, its data can be used to make arguments that minimum wage should be increased so the average worker can afford to rent, buy groceries, etc…
How Industries are Affected by Inflation
Unless you live off the grid and are fully self-sustained, we’re all consumers and are affected by inflation. Some of the results are good, while others aren’t.
Bonds
To avoid losing money during periods of inflation, consider investing in inflation-indexed bonds. The value of a Treasury Inflation-Protected Security increases with the measured CPI. As the base value of the bond increases, so does the interest paid on it.
Commodities
Raw materials such as gold, copper, oil, and cotton can fluctuate drastically in value thanks to the supply chain involved in getting them from the source to the consumer. As a result, the industries directly related to mining the materials see benefits, while processors and consumers see higher costs.
Real Estate
Real estate is an industry that usually benefits from inflation- from the point of view of the seller or developer. As the value of commercial and residential real estate inflates, it can mean big bucks when a property sells. Obviously, it’s not as great for buyers who are faced with low supply and ever-increasing prices. It could also mean that those who successfully purchase now could end up losing money if real estate values plummet in the coming years.
Stocks
Hard as they try, stocks don’t always hold up during periods of inflation. You’ll want to avoid any high-dividend paying stocks since your investment will take a hit as currency values decrease.
The Effects of Inflation on Individuals
Rapid or sustained inflation can influence the quality of life for many. Even those fortunate enough to have substantial savings can feel the negative effects of the loss of purchasing power per dollar.
If wages don’t follow the same upward trend of inflation, filing for bankruptcy can become a reality for many. People can no longer afford their lifestyle when the value of the dollar has decreased steadily and significantly in a short period of time. You can only work so many hours per week, and when the money isn’t worth what it used to be, it can feel like there isn’t enough time in a day to earn a living wage.
If you’re living on a fixed income, inflation can cause a lot of panic; SLC Chapter 13 attorney Rulon T. Burton and Associates knows that relief from financial woes takes time. If you’re having trouble living paycheck to paycheck, especially as the price of goods continues to go up in 2021, seek out assistance before it’s too overwhelming.
If you do need a bankruptcy attorney in Salt Lake City, Utah, turn to the best. Rulon T. Burton and Associates can help you with the paperwork and education required to recover from financial woes.
The Projected 2022 Outlook
There are no current indicators that inflation will come to a lull any time soon. Home values are leveling in some areas, but not much nationwide. The value of a dollar continues to weaken as scarcity of goods continues to be common. As of September 2021, inflation was recorded at a 5.4% increase for the year, meaning goods and services cost more than 5% more in September compared to January.
It is projected that the inflation rate will be closer to 2.6% by the end of 2022, which is closer to what it was in March 2021. This rate is dependent upon a number of factors, including supply chain and labor shortage issues being resolved.
While it is helpful that Americans are once again supporting the economy with both online and in-person shopping, it’s still necessary that we regulate consumption; we scaled back as a nation during the height of the COVID-19 pandemic but ramped up significantly when stimulus packages were distributed and lockdown restrictions were lifted. The economy will continue to struggle meeting demand unless consumer habits level out in 2022.
Remember that SLC Chapter 13 attorney Burton and Associates are here if you have questions about whether or not you can weather the financial crisis many of us have been facing the past few years. If you have questions about filing bankruptcy, contact an expert for guidance.