Consumer Spending And Inflation Grow In April

The Federal Reserve’s favored measure of inflation rose .4% on a month over month basis in April. Economists had expected it to only go up .1%.

Consumer Spending also increased as the personal consumption price index increased to 4.4% on a year over year basis, up from 4.2% in the prior month. This was primarily a result of higher spending on vehicles, insurance, and healthcare.

We had hoped that the actions of the Federal Reserve in aggressively raising interest rates was at an end. We’ll see what happens at their next meeting in June.

But given the increase in inflation, they may not have a choice in further raising the Fed Funds Rate. Interest rate increases across the board are obviously problematic for all businesses.

Time will tell.

Let me leave you with this.

Germany, the world’s fourth largest economy officially slipped into a recession last quarter. They’ve had negative GDP growth for the past two quarters.

This is Europe’s largest economy.

A 1.2% decrease in consumption is the main reason for the recession as food prices in Germany have increased 21.2% in the last year. In addition, Germany relies on Russia for the bulk of its natural gas needs.

Russia’s incursion into Ukraine has had a negative effect on Germany’s economy. When basic things like food and energy prices skyrocket, any country’s economy will have difficulties.

The question becomes, who’s next? Sadly, Germany’s plight sounds eerily similar to ours.

If you don’t think I’m tired of writing about bad economic news, you couldn’t be more wrong. But I have a responsibility to keep you informed and to help prepare you for the future.

We need to be ready for any possibility.

Hopefully our economy won’t recess. A soft landing would be optimal. But if we are going into a recession, the time to prepare is now.

That being sad, I do hope you have a Happy and Safe Memorial Day. Get some rest. You might need it.

We’re all going to get through this. Let’s get through it together.

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Chris Amundson
Accounting Solutions Ltd.

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