ECONOMY
By Dr . Uric Dufrene
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The economy is still a mixed-bag as we head into the holiday season
Not a day goes by that consumers are not forced to face up to higher prices . Thinking back over the past couple of years , there were different stages of the COVID economy with differing impacts on prices .
One of the first casualties was on automobiles . Forget about buying a used car with a good price . Consumers saw skyrocketing prices on used automobiles and then saw premium prices above the sticker price on new automobiles . New cars are still scarce , and many often require paying above the sticker price , if you can find one .
We then saw high prices spread to real estate . A dearth of supply and an increase in demand drove price increases . Consumers wanted more space at home , with moves to the suburbs and remote areas , and this drove real estate prices to reach price levels never seen . Not only were home prices sky high , but you were also lucky if you even had a chance to make an offer . And if you did make an offer , you had to offer above the asking price , just to be in the running . Real estate is supposed to be an illiquid asset , meaning that it takes time for the owner to convert to cash , without a significant loss of value .
With the COVID economy , we saw the opposite .
Homeowners could easily convert their home to cash , simply by listing .
If you wanted to build a home , you had to be prepared to pay outrageous prices for a 2X4 , assuming that it was in stock .
And how can we forget about gas prices exceeding $ 5 a gallon , or generic chicken wings selling for double from just a couple of years ago .
Prices remain elevated , but there is light at the end of the tunnel . Signs are emerging that we are past peak inflation . By now , most observers agree that the Fed was late to the game in slowing down price increases . “ Transitory ” was used repeatedly by Fed officials in describing price increases early in the inflation nightmare . Rather than lift the foot off the accelerator , the
12 NOVEMBER / DECEMBER 2022