Inflation
Jaw-Dropping Data!
Is Your Organization Ready for Inflation Shock?
Welcome to our May 2021 PowerStone Leadership Newsletter, Inflation - Is Your Organization Ready! In this issue we raise the topic of inflation from decades of dormancy and share concerning data to encourage you to take time to plan and prepare for potential surges in price for goods and services.
CPI - Consumer Price Index shot up to 4.2% in April 2021 the fastest since 2008.
The CPI - Consumer Price Index noted above may reflect short-lived price spikes as indicated by the Federal Reserve or may be a signal that long term price adjustments are on the way. As is often the case in forecasting, there are plenty of scenarios to consider when attempting to predict inflation. At Hagedorn & Associates, LLC., we work with you to evaluate the root causes of inflation specific to your business to preempt negative impacts to your bottom line.
PPI - Producer Price Index rose at a 6.2% annual pace for the 12 months ending in April 2021 which is the biggest annual jump since recordkeeping began.
“The Producer Price Index (PPI) program measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services.” US Bureau of Labor Statistic.
GDP (Deflator) up 4.2%
Another measure of inflation to note is the Gross Domestic Product Deflator which increased 4.2% in Q1 2021 from proceeding quarter Q42020 which was 1.9%.
What is Inflation? "An increase in the supply of money is the root of inflation, though this can play out through different mechanisms in the economy. Money supply can be increased by the monetary authorities either by printing and giving away more money to the individuals..." Investopedia.
Below is an alarming chart of US Monetary M1 Money Supply.
US Monetary Supply 1959 - March 2021
The U.S. money supply is all the physical cash and funds in checking and savings accounts in the nation. It often reflects the economy and inflation. The vertical spike at the far right on the chart below is due in part to printing money for pandemic emergency measures and stimulus.
"We are seeing substantial inflation; we are raising prices. people are raising prices to us, and it's being accepted." Warren Buffett, May 2021.
The Associated Press is reporting that "gas prices are rising and auto and lumber prices are soaring. Consumer goods companies are charging more for household basics like toilet paper, peanut butter and soft drinks. Price increase is resurrecting fears of an economic threat that has all but disappeared over the past generation. Runaway inflation occurs when prices for most goods and services not only rise but accelerate, making the cost of living steadily more expensive and shrinking the purchasing power of Americans’ earnings and savings."
“Plan for what it is difficult while it is easy, do what is great while it is small." ― Sun Tzu, The Art of War
At Hagedorn & Associates we work with you to design and facilitate a robust result-driven strategic plan that addresses the threat of an inflation surge. It is time to consider the reasons for price increases to determine if your business will be impacted. Inflation is hard to predict however evaluating potential impacts to your organization AHEAD of inflation is recommended.
Hagedorn & Associates will help guide you through the change process and provide creative business solutions that are focused on results. Many of us are working alone and over zoom. We feel isolated. Hagedorn & Associates invites you to reach out for one-on-one consulting to have a real conversation, to talk about the hard stuff and strategically plan for the best results in 2021.
Please share this newsletter with people in your organization, community and everyday life as it is intended for anyone interested in creating positive change and obtaining superior results. Thank you! Tina
Tina Hagedorn, President
8805 Harborview Drive, Suite 201
Gig Harbor, Washington 98332
Phone: (253) 820-4581