You can’t buy a break. Workers are making less. Retirees on a fixed income are getting squat from T-bills. And the government statistics on inflation hide some pretty important data. Let’s take a look.
One line item that caught my eye was the 3.9% 12-month increase in medical care services. That’s a pretty important cost to retirees, don’t you think? When T-bills pay, if I can even use the word pay, a measly 0.06%, I’d say a 3.9% increase is a real inflation problem if you have to pay for medical care service. But the Federal Reserve feels that it has a handle on inflation, and that low interest rates are good for you. You know that low interest rates are not good for you.
If you have kids buying their first home, you know banks aren’t lending to them. You also know the Fed has pushed investors to buy stocks. Your stocks might be up, especially if you own Young Research’s Retirement Compounders, but many people’s stock-investing days ended when the market bottomed in 2008. Most of you have friends who have completely missed this rally in stocks, except for the flyer they took on Apple—which has cratered. For some who were once retired, it’s time to go back to work.
But even those who already work are feeling the pinch. First-quarter wages were up 0.5% from a year earlier, but consumer prices increased by 1.7% during the same period. Any good news about low inflation is wiped out by low wage growth and low fixed-income rates. Not to mention that higher medical bills are lost in these low inflation numbers.