Inflation as measured by the Consumer Price Index (CPI) reached 8.6% last month. The last time inflation in our country hit this mark was over 40 years ago.
This increase was driven partly by energy costs that have risen 34.6% from a year ago and groceries which have also jumped 11.9% in that same period. The average American family budget has increased $341 over the last year. Inflationary pressures are almost everywhere with used cars up 1.8% and airfares up 12.6% just inside the month of May.
High inflation runs contrary to growth in our Gross Domestic Product (GDP). It’s much harder for companies to be profitable with prices increasing at such a rapid rate.
The stock market in response to this awful economy has been in a free-fall since the beginning of the year. The S&P Index is officially trading in bear territory as of this morning.
Let me leave you with this.
I’m going to call it. I’ve been hesitant, but it’s time.
We’re in a recession.
I’ve been through too many of these to not know what they feel like. It may be months before they actually make the call, but anyone who’s ever entrepreneured through one of these, knows what I’m talking about.
There’s just too many things wrong in our economy, and no one seems to be doing anything about it. Has Jimmy Carter returned to the White House?
Inflation has grown steadily since the new administration took over, with energy prices at the lead. We went straight from the coronavirus to a car-owner-virus.
Supply chain problems remain a constant including a lockdown in China exacerbating the problem. The war in Eastern Europe has no end in sight. Many major oil refineries have closed.
When crude oil prices hit $100 per barrel we all said it was impossible. They hit $120 last week. Many economists are expecting inflation to rise above 9% in the short term.
It’s time to define what this is and for all of us to begin managing our businesses differently.
Your numbers are extremely important. In order to get through this, you need to know exactly where you are. Your monthly financials are more important than ever.
Maintain your margins. Don’t be afraid to raise your prices. The last company in your marketplace to raise their prices will probably be the first one calling a bankruptcy attorney.
If you haven’t already claimed the Employee Retention Credit on your payrolls, do it now. It will take 10 – 12 months for us to get you those checks. This money may be exactly what you need to survive.
Make sure that you have a solid marketing plan in place. You’re going to lose clients in this mess. Make sure that you’re ahead of the curve replacing them.
Much more to follow.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, M&A Due Diligence, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.