Inflation: here we go again.. 🥵 

Last week we got an important update on inflation with the release of the January 2025 Consumer Price Index (CPI) data.

For reference, inflation is defined as an increase in the money supply through money printing and/or banks lending credit beyond what they have in the vaults. 💵

Most people think inflation is rising prices, but they are the symptom of the underlying issue.

I know i'm preaching to the choir when I say inflation has big implications for both our wallets and interest rates.

Because of all this, we've got to pay close attention to how it's changing.

Rising prices have been an issue since 2021 as homes, groceries, insurance, and just about everything else has gotten significantly more expensive.

Also, the cost of borrowing money has also gone up (in the form of higher interest rates). 📈

That's because lenders demand a higher return when they loan you money since future prices will be higher than today's prices.

Let's look at where inflation stands currently:

Inflation bottomed and is now rising.

After making some progress, the inflation rate has leveled out between 3-3.5% since July 2024.

Mind you, that's more than 50% over the Fed's stated target of 2%. 🤮

This, along with relatively strong economic indicators, has kept the Fed from cutting rates as much as investors expected/wanted.

And while it's not in the forecast, there are grumblings that the Fed might actually have to raise rates in the future if inflation keeps rising. 😳

Think about all the changes that are going on:

• We're adding tariffs to a range of products that essentially increases their price immediately.
• Labor costs are rising as deportations pick up. 
• Consumers aren't slowing down their spending - they're just putting it on the credit cards if they don't have the cash. 
• The money supply (M2) is continuing rise as it's still easy to get financing and the government is continuing to spend. 
• We're pushing to bring manufacturing back in the U.S. which is costly.

Now, it's not all bad...

There will be considerable advancements in AI that could reduce costs and increase productivity.

Also, DOGE is making progress sorting through all the bloated budgets in the government which has the potential to help the situation. 

Call me crazy, but my guess is the money gets reallocated rather than cut all together, though. 🤷‍♂️

Finally, there's the chance our economy cools and inflation does the same.

However, we've got to consider the evidence that parts of our economy are slowing down and prices are still picking up (aka stagflation).

What does it mean for you and your clients? 🤔

The proverbial clock is ticking. 🕰️

For the last 40 years, waiting to buy a house meant that the home price might go up some, but the monthly payment kept getting cheaper because mortgage rates were falling over time.

We could be looking at the opposite situation moving forward: the longer you wait to buy, the more your house payment increases. 🤯

This also suggests that the level of skill required to be successful as a real estate agent will continue to rise.

Agents who understand how to handle conversations about this topic (among a number of other changes) will have better results with their clients than those who don't have a clue.

💡 The landscape of who's buying, how they buy, and what they buy will change quickly and agents who serve those areas will have better odds of winning.

I'll be helping my coaching members position themselves to win by capitalizing on the major trends in our markets over the next 5 years.

✅ There's a few spots open in the group if you'd like the help, too.

Don't forget, there's always opportunity when there's change! 🚀

Dr. Alex Stewart
Founder