Main Street’s Inflation is Well Above 2.0%

Joe Rulison

The disconnection between the Federal Reserve and Main Street could not be any further apart. On one hand, the Federal Reserve Board believes the overall inflation rate is coming close to its target of 2.0%. On the other hand, for the average consumer, food costs, insurance costs, health insurance, and basic necessities are hovering well above 4.0%.

As the Treasurer for a public water authority, our cost to deliver water to consumers and businesses will continue to escalate, with average rates literally “floating” above 4.5%.

There is not a single individual that I speak with who doesn’t continue to feel the impact of inflation, The best way to combat inflation over the next 18 months is to make sure that all cash on hand is invested in short-term and safe investments that will remain above the level of inflation.

At the end of last year, three of my outlook points were that cash has great value, investment returns will outpace the cost of inflation, and stronger union wins will lead to higher labor costs and contribute to a higher bottom-line inflation rate.

My advice: don’t underestimate the level of inflation being felt by Main Street, and make sure that all cash is being put to work at market-rate levels. The difference can be between a balanced budget or a budget gap that will require higher taxes for your Main Street taxpayers.