Inflation Fatigue
Why prices aren’t the problem… it’s how long people can keep up
Most people think inflation is simple.
Prices go up… that’s inflation. End of story.
For years, that was manageable.
Call it 2% to 2.5%. A slow bleed, but tolerable.
Why?
Because assets outpaced it.
Real estate moved higher.
Stocks moved higher.
Even cash gave you something.
There was balance.
That balance is gone.
What Changed
The pandemic broke the system.
We shut down supply…
and stimulated demand.
That combination was always going to end one way.
Higher prices.
Strip it down to basic economics…
Less supply.
Stable demand.
That’s inflation.
But demand didn’t fall the way people expected.
People didn’t stop buying.
They just changed how they bought.
From stores… to online.
So now you had a system with less production,
but still plenty of consumption.
Then came policy.
Stimulus checks.
PPP loans.
SBA loans at historically low rates.
Over $1.2 trillion pushed into the system. (National Bureau of Economic Research)
So ask yourself…
What happens when you flood a constrained system with money?
You don’t stabilize it.
You accelerate it.
That’s how we got to 9% inflation in 2022.
Not surprising.
Inevitable.
Where We Are Now
Today, we’re told inflation is “cooling.”
Core inflation sits around 2.5% to 2.7%.
Headline inflation around 3.3%.
Sounds better.
But none of us live in the “core.”
We live in:
Gas
Food
Rent
Insurance
The things you don’t get to avoid.
And those prices?
Still elevated.
Why Markets Keep Moving
“If inflation is hurting consumers… why are markets fine?”
Because companies don’t just absorb higher costs.
They pass them through.
Diesel goes up…
Shipping goes up…
Food goes up…
Everything eventually moves.
Those costs don’t disappear.
They transfer.
And when they transfer successfully?
Revenues rise.
Earnings hold.
Stocks move higher.
Inflation doesn’t break markets.
It reshapes them.
The Investor Problem
You can’t sit in cash and win anymore. We discussed this on Yahoo Finance with Julie Hyman a few weeks ago.
A few years ago:
Cash ~5%
Inflation ~3%
You had a real return.
Today?
Cash ~3.5%
Inflation ~3.3%
After taxes?
You’re losing.
Quietly.
Consistently.
So what happens?
You move.
Not because you want to…
Because you have to.
Into equities.
Into credit.
Into risk.
This isn’t always about opportunity.
Sometimes it’s about survival.
What Comes Next
Gas is rising again.
That hasn’t fully hit food and retail yet.
But it will.
Tariffs?
They lag… but they show up.
So while inflation looks like it’s cooling…
The pressure isn’t gone.
It’s just delayed.
The “Bright Side”
Consumers are still spending.
Why?
Credit.
Cheap debt still exists for some.
Home equity is accessible.
HELOCs are being used.
That liquidity is keeping things going.
For now.
Because that only works if prices stabilize.
If they don’t?
That cushion disappears.
The Reality
CPI measures the rate of change…
not the level of prices.
That matters.
Lower inflation doesn’t mean cheaper.
It just means things are getting expensive… slower.
But they’re still getting more expensive.
Every month.
For years now.
Inflation Fatigue
This isn’t just economic.
It’s psychological.
People are tired.
Tired of higher grocery bills.
Tired of higher gas prices.
Tired of feeling like they’re falling behind.
Even when the data says things are “better.”
Because their reality says otherwise.
The Punch
We’re not asking if inflation is real anymore.
We know it is.
The real question is this:
How much longer can people absorb it… before they stop spending?
Because when that shifts…
It’s not just inflation that changes.
It’s the entire economy.
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Great piece brotha