The Expert Podcast

So everybody wants to know with the economy, what's happening next? Is inflation going to go up? Will there be a recession? Will there be a depression? What's going to happen to your money?

Well, a lot of ways to predict the future—which, you know, nobody has a crystal ball—is to look at the facts. Look at the data. Not people's opinions. Not news stories that say, “I think this is going to happen,” but look at what is happening now. Let's look at some data, look at four or five facts and financial records that will tell us what's going to happen in the future.

Well first of all, according to this article, half of Americans are starting to dip into savings or going into debt to cover expenses. 72 percent of consumers—this is low income—have to dip into savings or are going into debt. That's a new thing. For the last couple years, people weren’t getting rich, but they weren’t having to go into debt. There was stimulus money, there was unemployment money, there was pandemic relief, all these different things—PPP loans, EIDL loans—that were keeping the economy afloat.

Well, now that that’s over and we have inflation and people are buying less, half of Americans are starting to go into debt. You might think, “Well, that’s just low income.” Well, it’s not, because even people making a hundred thousand or more are living paycheck to paycheck. 36 percent—that’s more than a third—making six figures are living paycheck to paycheck. That’s a big deal.

What does that mean for the future? If the high-income earners are living paycheck to paycheck, they’re going to start pulling back on purchases. It’s called demand destruction. We’re already seeing that. Well, that’s a spiral effect. The high incomes start spending less on, you know, oil changes, or getting their hair done, or their nails done, or, you know, buying an extra dinner out versus eating at home. Now that’s going to be less money in the economy, less GDP. The employees of those businesses will have either less income or be laid off, so now they’ll spend less money—and they'll go into a deep spiral.

Is it affecting anything else? Well, according to the CEO of Ford, auto loan delinquencies are on the rise. We’re looking for every data point we can to get a read on where the consumer is—and this is what’s happening: auto loan delinquencies are going up. So already, people—not only are they living paycheck to paycheck or dipping into savings—even with that, they still can’t pay their car loans. Even dipping into savings and living paycheck to paycheck, they can’t pay their car loans.

What about thinking ahead for retirement? Well, we looked at this before. The stock market has wiped out 3 trillion in retirement savings. How does that compare to the pandemic relief? Well, the pandemic relief put 3.7 trillion into the economy of total outlays—actual payments. Well, three trillion of that’s already wiped out. It’s like we gave it away for free. And people can’t pay their car loans, are living paycheck to paycheck, and going into debt.

What are your thoughts on this? What are you seeing in your life? Is this happening to you directly—people you know, relatives? How about your job? What is your company saying about the financial future of the company? Are there any kind of rumors about what’s going to happen? Are customers buying less from your company? Are you seeing less traffic in your retail showroom? Are commissions down for salespeople? What do you see?

And if this is going to happen, what plans are you making for the future? What precautions are you taking for a future with less money? Are you spending less? Are you tightening the belt? Or are you buying ahead? Are you buying more goods and services because you think inflation is coming—so if you buy it now, it’ll be cheaper than even six months from now?

Obviously, some things you can’t buy in advance. You can’t buy two years' worth of gasoline for your car. But you can buy groceries in advance, clothing, maybe services. Are you buying that now because you think it’s going up?

We had an accidental buy-ahead that happened to us last month. We had airline travel that we booked really almost a year ago, at the beginning of 2021, and the trip got delayed. And then in the fall, there was a boost in corona cases in some of the places we were going to go, so we held back on going in September or October of last year.

And then we were going to go again in the spring—in March or April—and I forget what happened then, but each time we were able to reschedule the trip and didn’t lose out. It was a refundable ticket. And that ticket, I think we paid $1,400 for each person for the trip, and had two or three stops on it. And so when we went to finalize the trip—we went in about a month ago—we had to change some of the dates, but that ticket was already purchased: $1,400.

And so we went on the trip. Well, coincidentally, after we went, we looked to see—well, let’s maybe book another trip to go again in a couple of months. That same exact trip now is $3,800. It’s more than double. It’s almost triple the cost—$3,800 for a person to go on that same trip.

So there may be things that cost more money than they did a few months ago. But who knows what the future is going to be like? Tell us what you're seeing, and we'll see you next video.