In this episode, the series on growing your business through a downturn continues. This topic is very relevant to what’s happening in the current economy. Planning strategically and looking ahead will help you stay proactive so that you don’t just survive economic hardship, but thrive throughout it.
What people need to know is that whether a recession is coming or not, money is still being printed at a high rate. The CPI, or Consumer Price Index, is a widely used measure of inflation. However, the experience most people are having in their lives financially doesn’t seem to match up with the CPI data.
As long as the money supply keeps increasing, prices are probably not coming back down. We can expect this to continue to some degree. It’s also important to acknowledge that the way the CPI is measured has changed greatly over time.
For example, it no longer takes into account the cost of a house. They now only measure rental equivalence, which is going to lead to a much different number. The CPI is also designed to adjust the cost of goods prices down, which makes it seem even more unclear about what the CPI is actually measuring.
Interestingly, there is a group out there still using the old methodology of the Consumer Price Index publishing what is probably more realistic data. The result is a number that is quite a bit higher than the reported 7.5%. In fact, it’s about twice that much. As a business owner, you must recognize that cost increases are going to keep coming. Find other indicators other than the CPI to help guide your strategic decision making.
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