Financial Advisor in Salt Lake City, Mark K. Lund, Presents The Effective Investor Newsletter, August 15, 2022

How long will high inflation last and what should you do about it?

Most people understand that inflation is when prices go up. To be more precise, the International Monetary Fund defines it this way: “Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country (emphasis added).”1

While many measures of economic activity can seem abstract and far removed from everyday life, inflation affects all of us in ways we can’t ignore.

American writer and humorist Sam Ewing captured this well when he wrote, “Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.”2

Inflation doesn’t just steal money from your paycheck and savings every time you go to buy things. It also reminds you of the changes that come with the passage of time. The $5 haircut is part of a bygone era.

Recently, inflation has been running at rates not seen since the early 1980s. Led by a huge short-term spike in gasoline prices, the Consumer Price Index (CPI), a broad measure of the cost of living calculated by the Bureau of Labor Statistics, rose more than 9% from a year ago.3 This recent increase is certainly higher than expected, especially in the wake of the Federal Reserve’s aggressive move to raise interest rates.

Economists agree that there are three major factors contributing to our current high inflation.

A short-term cause has to do with the aftermath of COVID. In the first year of the pandemic, while manufacturers were cutting back production in anticipation of an economic slowdown, consumers were given trillions of additional dollars in stimulus funds and extra unemployment benefits. When you have more money chasing fewer goods, prices tend to go up. This imbalance is still working itself out.

A middle-term cause has been the rise in wages. Several factors have caused a record number of people to quit their jobs. Unemployment is at a record low and companies have had to raise wages (their largest expense) to attract needed workers. This trend is continuing.

And finally, the rising cost of debt will put upward pressure on prices. For more than a decade it has been unthinkable for central banks to raise benchmark interest rates. This has meant that both governments and businesses have been able to service their debt at a very low cost. But as the Fed raises rates, the cost of borrowing will rise, putting pressure on public budgets and forcing businesses to pass along these higher costs.

Knowing that higher-than-usual inflation may be around for a while, what should you do?

First of all, as always, control what you can control. That means adjusting your spending habits, if necessary, to keep in line with your budget. And continue working toward your long-term investing goal. Your advisor will have strategies for helping you keep your plan on track.

Second, don’t worry about what you can’t control. Often, what we worry most about are future events that are mere speculation. Meditating on what could go wrong accomplishes nothing, except to take the joy out of life.

Finally, if you have questions or concerns that might benefit from a conversation with your trusted advisor, be sure to reach out.

If you ever have any questions about your investments or retirement plans, please feel free to give me a call at 801-545-0696.

Mark Lund
Stonecreek Wealth Advisors, Inc.
11576 S State Street, Bldg. 1002
Draper, UT 84020


This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by Efficient Advisors, LLC (“EA’) for Mark Lund, Mark is known as a Wealth Advisor, The 401k Advisor, Investor Coach, Financial Advisor, Financial Planner, Investment Advisor and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. a fiduciary, independent, fee-only, Registered Investment Advisor firm providing investment and retirement planning for individuals and 401k consulting for small businesses. Mark’s newsletter is called The Fiduciary Report. Cities served in Utah are: Salt Lake County, Utah County, Park City, Salt Lake City, Murray, West Jordan, Sandy, Draper, South Jordan, Provo, Orem, Lehi, Highland, Alpine, American Fork. The views expressed herein are exclusively those of Efficient Advisors, LLC (‘EA’), and are not meant as investment advice and are subject to change. All charts and graphs are presented for informational and analytical purposes only. No chart or graph is intended to be used as a guide to investing. EA portfolios may contain specific securities that have been mentioned herein. EA makes no claim as to the suitability of these securities. Past performance is not a guarantee of future performance. Information contained herein is derived from sources we believe to be reliable, however, we do not represent that this information is complete or accurate and it should not be relied upon as such. All opinions expressed herein are subject to change without notice. This information is prepared for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. You should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. You should note that security values may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Investing in any security involves certain systematic risks including, but not limited to, market risk, interest-rate risk, inflation risk, and event risk. These risks are in addition to any unsystematic risks associated with particular investment styles or strategies.