Guest Post by Peter Reagan
My fellow Americans. We’re spending more. Getting less for money. Inflation is getting worse, and, yes, we’re looking at more headaches in the lead-up to the holidays.
It’s a lot happening all at once, and no one is happy about it. So, let’s get into…
Reuters reports U.S. retail sales rose “a stronger-than-expected” 0.8% last month.
Which sounds like good news, doesn’t it? Especially when you consider that, over the last 10 years, retail spending rose by 0.45% per month on average.
After all, if retail sales are up, that means that the economy is growing which means that businesses will start hiring again (they’ve had a protracted near hiring freeze), and happy days will be here again, right?
Except, like so many things in life, the devil is in the details.
What is driving the increase in retail sales?
Gas prices.
That’s right, people are spending more because they still have to get to work, take the kids to school, get to the dentist and doctor’s offices, not because they’re splurging on steaks this week, or buying themselves a “vacation home.”
Gasoline prices rose 7.1% in September, and gas station sales jumped 6.4%.
Now, here’s where things get interesting.
Retail sales figures are reported in dollars, without adjusting for inflation. That means higher prices produce higher sales figures even when we aren’t buying more stuff.
And when economists stripped out automobile sales, gasoline, building materials and food services, the remaining retail sales increased just 0.1% in September.
That’s a very different picture from the headline’s 0.8% increase.
In other words, Americans are spending more, but that doesn’t mean they’re getting more.
In fact, the Labor Department’s latest figures show that inflation-adjusted average hourly earnings fell 0.5% in September and were down 0.7% compared with a year earlier.
That’s the real problem. We’re paying more, but our paychecks are buying less.
And when that happens, families naturally start reconsidering their spending. Picking out generic corn flakes at the grocery store. Skipping the nine-dollar latte. Planning a “staycation” rather than a family trip this year…
This isn’t the news anyone wants to hear. We want to do better financially, provide for our families and plan for our futures.
But that’s getting harder when the cost of necessities, the cost of living, keeps rising.
If only it stopped at the gas pump.
Unfortunately, it doesn’t.
The Labor Department just reported that the Producer Price Index (PPI) jumped 1.3% in September – its largest monthly increase in four and a half years.
The PPI index rose 6.3% from a year ago. As you might expect, fuel accounted for much of the September increase, but prices rose for services and other costs as well.
(If you’re not familiar, PPI is an indicator that tracks changes in costs for the goods and services sold by businesses. It’s what economists call a “leading indicator” of price pressures that eventually show up on store shelves.)
The latest figures are concerning, to say the least.
Businesses faced with rising costs generally have few choices. They can absorb those costs and accept smaller profit margins (but they usually don’t). They can try to reduce expenses elsewhere (cut investment, expansion or headcount). Or they can raise the prices of their products.
Not every increase in producer prices gets passed along to families – my back-of-the-envelope calculation says about 80% of them do. Not right away, in the 3-6 months ahead. And PPI doesn’t tell us exactly what will happen to prices for us, the end users.
But it does tell us something important: The pressure to raise prices isn’t just at the gas pump anymore.
And that brings us to another problem…
A new report from the Federal Reserve shows that they’re hearing about higher prices across the country, while hiring remains sluggish.
That’s a deeply uncomfortable situation.
The Fed already raised interest rates by a quarter of a percentage point in September, bringing its benchmark rate to 3.75%-4.00%.
Now, with inflation heating up again, they’ll be forced to consider another increase.
And at least one major financial institution has changed its mind about what comes next. Citigroup had been the lone holdout among major forecasters saying the Fed to leave rates unchanged for the rest of 2026.
Not anymore. Citi now expects another quarter-point rate increase in December. It also doesn’t expect the Fed to begin cutting rates until June 2027, at the soonest.
Of course, that’s a forecast, not a certainty. But here’s what concerns me.
The Fed is trying to bring inflation back down to its 2% target. Yet inflation has remained stubbornly above that level, and September’s CPI was 3.7% on an annual basis
Frankly, I suspect most of us would be ecstatic to see 2% inflation again.
But remember, even 2% inflation doesn’t mean prices return to where they were before. It means prices, on average, are still rising – just more slowly.
Meanwhile, those higher prices are already spreading into other parts of everyday life.
And one particularly unfortunate example is coming at the worst possible time of year…
Nobody likes a sneak attack. Something about it just seems… dishonest. Getting hit when you aren’t expecting it, when you aren’t prepared to handle it or avoid it. When you didn’t even know you were in a fight.
But sometimes life throws us surprises that feel almost exactly like that.
When your family has been struggling been making ends meet, while creeping prices and spikes in fuel costs are starting to make your budget feel tight enough to burst…
What do you do?
If you’re like most people, you look for little extras you can cut. Those everyday splurges, small changes to spending on non-necessities. Hopefully, over a month, they add up to enough savings to give you a little breathing room.
Maybe cutting out those twice-weekly Starbucks drive-through trips is enough to make your budget work. Cooking Sunday breakfast at home instead of taking your partner to brunch at your favorite café. Watching your Friday evening movie at home, on the couch instead of going to the movie theater.
And we all know what happens when you know, in advance, you’re planning on spending extra.
Even if you know that occasion is coming, it can be stressful to figure out where the extra money will come from.
And if it’s a special occasion for your loved ones, kids or grandkids… Well, that can be heartbreaking.
Most of us know the feeling of wanting to make Christmas special. Magical. You remember what it was like to be a kid, the anticipation, the excitement, the almost unbearable wait to see what Santa put under the tree this year…
Nobody wants to explain to a six-year-old why Santa wasn’t able to come through this year.
Reuters reports that toy prices are rising considerably faster than prices generally. According to September’s inflation data, toy prices rose 6.6% over last year.
That’s nearly twice the overall inflation rate. (Toyflation? Is that what we’re calling it now?)
Whatever we call it, it’s terrible timing for families already struggling with higher costs for gasoline, groceries and basic necessities.
Reuters points to tariffs and high energy costs as contributing factors, particularly for toys made overseas. International shipping and petroleum-based materials costs (pretty much all plastic comes from crude oil) push the price even higher.
When families have already made sacrifices just to keep regular expenses under control? There might not be much left to cut.
Now, not everyone is in that position. Thankfully, it’s just toys and not everything that’s 6.6% more expensive. But the overall trend tells us something – how inflation reaches into corners of everyday life. And we don’t necessarily think about it until we’re standing in a store, looking at a price tag and wondering if we need to get our glasses prescription upgraded.
I think that’s the most frustrating part.
These aren’t extravagant luxuries we’re talking about. I’m talking about LEGO sets and Tickle-Me Elmo dolls and stuffed animals. Some of the things our children and grandchildren absolutely treasure, at least for a few months. Gift-giving is one of the few chances we have to show them just how much we love them, because it’s all but impossible to say with words.
I’m not crying because toys are too expensive. I’m frustrated and angry that everyday American families are increasingly finding themselves in a situation where they’re forced to make tough choices. Go to the dentist, or pay the phone bill? Reschedule the check-up or cancel Netflix?
When hard-working families have to make these choices, they’re lowering their standard of living. That’s upsetting.
And the people responsible for managing inflation and growth in the first place are facing a challenge that isn’t easy to fix.
The Fed can raise interest rates to slow inflation. But higher borrowing costs can also discourage businesses from expanding, make financing more expensive and weaken an already sluggish labor market.
Or the Fed can leave rates unchanged, or eventually lower them, to avoid putting additional pressure on the economy. But that approach carries its own risk: Inflation will stay higher longer.
That’s the bad news.
It’s incredibly difficult to manage an entire economy, and it’s debatable whether anyone has ever done that especially well for very long.
Unfortunately, we have to live with the consequences.
There is some good news, though.
While we can’t personally decide what happens to inflation, interest rates or the broader economy, we do have choices about how we prepare for an uncertain financial future.
And I think the first step is recognizing the difference between having a certain amount of money and having a certain amount of purchasing power.
Take retirement savings, for example.
You might have spent 30 or 40 years accumulating what looks like a substantial retirement account balance.
But the balance is expressed in dollars. Your retirement won’t be.
Your retirement will be measured in groceries, property taxes, electricity bills, visits to the doctor, vacations and (hopefully) many years of Christmas presents for your grandchildren.
We pay for those in dollars, of course, but what matters is how much those dollars will actually buy.
And if inflation keeps growing faster than our savings, our standard of living can decline even if our account balance doesn’t.
That’s why I believe diversification deserves serious consideration, particularly for older Americans approaching or already in retirement.
You know how I feel about physical gold bullion. Gold has been recognized as a store of value across civilizations for thousands of years. Unlike dollars, it can’t be created by a central bank or expanded through government spending. Its supply is limited, and demand comes from investors, central banks, jewelry buyers and other sources around the world.
Now, does that mean gold automatically rises every time inflation increases? No. In fact, I’ve previously discussed how gold prices can fall even when inflation rises. Gold prices fluctuate, sometimes significantly.
But over long periods, gold has lasted through so many changes in currencies, governments and even empires. Because it’s independent of those things. Over and over again, throughout history, gold has been the safe-haven asset of choice.
Diversifying a portion of your savings into physical precious metals is one way to reduce your dependence on the future purchasing power of the dollar. It doesn’t eliminate financial risk, but it gives you exposure to an asset with a fundamentally different source of value.
And unlike the Federal Reserve, you don’t have to worry about making decisions for an entire national economy.
You only have to make informed decisions about your own financial future.
If maintaining purchasing power throughout your retirement years interests you, I encourage you to learn more about the benefits, limitations and costs of diversifying with physical precious metals.
The dollar buys less today than it did a year ago, a decade ago, a generation ago. That slide is the predictable result of endless printing and borrowing. Dr. Ron Paul believes the FED has the answer. But they’re keeping it to themselves. Fortunately, a new financial chart has publicly exposed their secret moves. See it for yourself: https://freekit.birchgold.com/lf/ro...D_v02a_article&placement=article&cid=rp_media
To learn more about how physical gold could help protect your retirement portfolio, click here to get your FREE info kit on Gold IRAs from Birch Gold Group. And now introducing a Crypto IRA to capitalize on the fastest growing market in the world.
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Continue reading...
[ H/T The Burning Platform ]
My fellow Americans. We’re spending more. Getting less for money. Inflation is getting worse, and, yes, we’re looking at more headaches in the lead-up to the holidays.
It’s a lot happening all at once, and no one is happy about it. So, let’s get into…
The details
Reuters reports U.S. retail sales rose “a stronger-than-expected” 0.8% last month.
Which sounds like good news, doesn’t it? Especially when you consider that, over the last 10 years, retail spending rose by 0.45% per month on average.
After all, if retail sales are up, that means that the economy is growing which means that businesses will start hiring again (they’ve had a protracted near hiring freeze), and happy days will be here again, right?
Except, like so many things in life, the devil is in the details.
What is driving the increase in retail sales?
Gas prices.
That’s right, people are spending more because they still have to get to work, take the kids to school, get to the dentist and doctor’s offices, not because they’re splurging on steaks this week, or buying themselves a “vacation home.”
Gasoline prices rose 7.1% in September, and gas station sales jumped 6.4%.
Now, here’s where things get interesting.
Retail sales figures are reported in dollars, without adjusting for inflation. That means higher prices produce higher sales figures even when we aren’t buying more stuff.
And when economists stripped out automobile sales, gasoline, building materials and food services, the remaining retail sales increased just 0.1% in September.
That’s a very different picture from the headline’s 0.8% increase.
In other words, Americans are spending more, but that doesn’t mean they’re getting more.
In fact, the Labor Department’s latest figures show that inflation-adjusted average hourly earnings fell 0.5% in September and were down 0.7% compared with a year earlier.
That’s the real problem. We’re paying more, but our paychecks are buying less.
And when that happens, families naturally start reconsidering their spending. Picking out generic corn flakes at the grocery store. Skipping the nine-dollar latte. Planning a “staycation” rather than a family trip this year…
This isn’t the news anyone wants to hear. We want to do better financially, provide for our families and plan for our futures.
But that’s getting harder when the cost of necessities, the cost of living, keeps rising.
If only it stopped at the gas pump.
Unfortunately, it doesn’t.
The Labor Department just reported that the Producer Price Index (PPI) jumped 1.3% in September – its largest monthly increase in four and a half years.
The PPI index rose 6.3% from a year ago. As you might expect, fuel accounted for much of the September increase, but prices rose for services and other costs as well.
(If you’re not familiar, PPI is an indicator that tracks changes in costs for the goods and services sold by businesses. It’s what economists call a “leading indicator” of price pressures that eventually show up on store shelves.)
The latest figures are concerning, to say the least.
Businesses faced with rising costs generally have few choices. They can absorb those costs and accept smaller profit margins (but they usually don’t). They can try to reduce expenses elsewhere (cut investment, expansion or headcount). Or they can raise the prices of their products.
Not every increase in producer prices gets passed along to families – my back-of-the-envelope calculation says about 80% of them do. Not right away, in the 3-6 months ahead. And PPI doesn’t tell us exactly what will happen to prices for us, the end users.
But it does tell us something important: The pressure to raise prices isn’t just at the gas pump anymore.
And that brings us to another problem…
The Fed’s inflation challenge just got worse
A new report from the Federal Reserve shows that they’re hearing about higher prices across the country, while hiring remains sluggish.
That’s a deeply uncomfortable situation.
The Fed already raised interest rates by a quarter of a percentage point in September, bringing its benchmark rate to 3.75%-4.00%.
Now, with inflation heating up again, they’ll be forced to consider another increase.
And at least one major financial institution has changed its mind about what comes next. Citigroup had been the lone holdout among major forecasters saying the Fed to leave rates unchanged for the rest of 2026.
Not anymore. Citi now expects another quarter-point rate increase in December. It also doesn’t expect the Fed to begin cutting rates until June 2027, at the soonest.
Of course, that’s a forecast, not a certainty. But here’s what concerns me.
The Fed is trying to bring inflation back down to its 2% target. Yet inflation has remained stubbornly above that level, and September’s CPI was 3.7% on an annual basis
Frankly, I suspect most of us would be ecstatic to see 2% inflation again.
But remember, even 2% inflation doesn’t mean prices return to where they were before. It means prices, on average, are still rising – just more slowly.
Meanwhile, those higher prices are already spreading into other parts of everyday life.
And one particularly unfortunate example is coming at the worst possible time of year…
The sucker punch inbound just in time for the holidays
Nobody likes a sneak attack. Something about it just seems… dishonest. Getting hit when you aren’t expecting it, when you aren’t prepared to handle it or avoid it. When you didn’t even know you were in a fight.
But sometimes life throws us surprises that feel almost exactly like that.
When your family has been struggling been making ends meet, while creeping prices and spikes in fuel costs are starting to make your budget feel tight enough to burst…
What do you do?
If you’re like most people, you look for little extras you can cut. Those everyday splurges, small changes to spending on non-necessities. Hopefully, over a month, they add up to enough savings to give you a little breathing room.
Maybe cutting out those twice-weekly Starbucks drive-through trips is enough to make your budget work. Cooking Sunday breakfast at home instead of taking your partner to brunch at your favorite café. Watching your Friday evening movie at home, on the couch instead of going to the movie theater.
And we all know what happens when you know, in advance, you’re planning on spending extra.
Even if you know that occasion is coming, it can be stressful to figure out where the extra money will come from.
And if it’s a special occasion for your loved ones, kids or grandkids… Well, that can be heartbreaking.
Most of us know the feeling of wanting to make Christmas special. Magical. You remember what it was like to be a kid, the anticipation, the excitement, the almost unbearable wait to see what Santa put under the tree this year…
Nobody wants to explain to a six-year-old why Santa wasn’t able to come through this year.
Reuters reports that toy prices are rising considerably faster than prices generally. According to September’s inflation data, toy prices rose 6.6% over last year.
That’s nearly twice the overall inflation rate. (Toyflation? Is that what we’re calling it now?)
Whatever we call it, it’s terrible timing for families already struggling with higher costs for gasoline, groceries and basic necessities.
Reuters points to tariffs and high energy costs as contributing factors, particularly for toys made overseas. International shipping and petroleum-based materials costs (pretty much all plastic comes from crude oil) push the price even higher.
When families have already made sacrifices just to keep regular expenses under control? There might not be much left to cut.
Now, not everyone is in that position. Thankfully, it’s just toys and not everything that’s 6.6% more expensive. But the overall trend tells us something – how inflation reaches into corners of everyday life. And we don’t necessarily think about it until we’re standing in a store, looking at a price tag and wondering if we need to get our glasses prescription upgraded.
I think that’s the most frustrating part.
These aren’t extravagant luxuries we’re talking about. I’m talking about LEGO sets and Tickle-Me Elmo dolls and stuffed animals. Some of the things our children and grandchildren absolutely treasure, at least for a few months. Gift-giving is one of the few chances we have to show them just how much we love them, because it’s all but impossible to say with words.
I’m not crying because toys are too expensive. I’m frustrated and angry that everyday American families are increasingly finding themselves in a situation where they’re forced to make tough choices. Go to the dentist, or pay the phone bill? Reschedule the check-up or cancel Netflix?
When hard-working families have to make these choices, they’re lowering their standard of living. That’s upsetting.
And the people responsible for managing inflation and growth in the first place are facing a challenge that isn’t easy to fix.
The Fed can raise interest rates to slow inflation. But higher borrowing costs can also discourage businesses from expanding, make financing more expensive and weaken an already sluggish labor market.
Or the Fed can leave rates unchanged, or eventually lower them, to avoid putting additional pressure on the economy. But that approach carries its own risk: Inflation will stay higher longer.
That’s the bad news.
It’s incredibly difficult to manage an entire economy, and it’s debatable whether anyone has ever done that especially well for very long.
Unfortunately, we have to live with the consequences.
What happens when your savings buy less?
There is some good news, though.
While we can’t personally decide what happens to inflation, interest rates or the broader economy, we do have choices about how we prepare for an uncertain financial future.
And I think the first step is recognizing the difference between having a certain amount of money and having a certain amount of purchasing power.
Take retirement savings, for example.
You might have spent 30 or 40 years accumulating what looks like a substantial retirement account balance.
But the balance is expressed in dollars. Your retirement won’t be.
Your retirement will be measured in groceries, property taxes, electricity bills, visits to the doctor, vacations and (hopefully) many years of Christmas presents for your grandchildren.
We pay for those in dollars, of course, but what matters is how much those dollars will actually buy.
And if inflation keeps growing faster than our savings, our standard of living can decline even if our account balance doesn’t.
That’s why I believe diversification deserves serious consideration, particularly for older Americans approaching or already in retirement.
You know how I feel about physical gold bullion. Gold has been recognized as a store of value across civilizations for thousands of years. Unlike dollars, it can’t be created by a central bank or expanded through government spending. Its supply is limited, and demand comes from investors, central banks, jewelry buyers and other sources around the world.
Now, does that mean gold automatically rises every time inflation increases? No. In fact, I’ve previously discussed how gold prices can fall even when inflation rises. Gold prices fluctuate, sometimes significantly.
But over long periods, gold has lasted through so many changes in currencies, governments and even empires. Because it’s independent of those things. Over and over again, throughout history, gold has been the safe-haven asset of choice.
Diversifying a portion of your savings into physical precious metals is one way to reduce your dependence on the future purchasing power of the dollar. It doesn’t eliminate financial risk, but it gives you exposure to an asset with a fundamentally different source of value.
And unlike the Federal Reserve, you don’t have to worry about making decisions for an entire national economy.
You only have to make informed decisions about your own financial future.
If maintaining purchasing power throughout your retirement years interests you, I encourage you to learn more about the benefits, limitations and costs of diversifying with physical precious metals.
The dollar buys less today than it did a year ago, a decade ago, a generation ago. That slide is the predictable result of endless printing and borrowing. Dr. Ron Paul believes the FED has the answer. But they’re keeping it to themselves. Fortunately, a new financial chart has publicly exposed their secret moves. See it for yourself: https://freekit.birchgold.com/lf/ro...D_v02a_article&placement=article&cid=rp_media
To learn more about how physical gold could help protect your retirement portfolio, click here to get your FREE info kit on Gold IRAs from Birch Gold Group. And now introducing a Crypto IRA to capitalize on the fastest growing market in the world.
Tweet
Continue reading...
[ H/T The Burning Platform ]
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