IS INFLATION FINALLY COMING?

We have two world's going on in the U.S.  One is that "we need to get the country going again" and the other is the reality that the country is actually steaming along near or at maximum performance.  Not only that, but the global economy is doing even better.

For example, last year had the highest household income ever.*  Credit card debt and household debt is at a record high.**  At the same time as all this, there is talk of deporting a lot of undocumented or other immigrants on temporary visas.  There is a shortage of labor and exporting people will exacerbate the problem.***

When is the congress and our president going to face reality?  With the recent tax cut, they are throwing gasoline on the fire.****  But small firms plan to spend even more on plant and equipment.****  As this is an area of the economy that has lagged, this change will probably increase the GDP that is already up to 3%.  If you want to bet on something, should you bet on rising inflation?

It is true that hourly and weekly wages are only rising slowly on average and that means there are some people for whom wages are not rising at all.  So where are consumers getting all the money to keep consuming at it extreme high in addition to adding credit card debt and maybe withdrawing money from IRAs and 401Ks?  One place is home equity that is, yes, also at an all-time high.**** 

Homeowners are racking up record amounts of home equity, thanks to fast-rising values in today's competitive housing market. No surprise, more people are now starting to tap that cash. What are they spending it on? Mostly making their homes even more valuable.*****

Renovation spending is soaring, and 80 percent of borrowers taking out home equity lines of credit say they would consider using that money to renovate, according to a survey released in December by TD Bank.*****
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Remodeling spending topped $152 billion in 2017, and renovations for owner-occupied single-family homes will increase 4.9 percent in 2018 over 2017, according to the NAHB. That does not include remodeling done by investors looking to flip or rent properties, both of which are increasing as well.*****

Read the entire article for even more information on home equity.

* http://www.washingtonexaminer.com/median-household-incomes-hit-new-record-high-in-2016-finally-eclipsing-1999-levels/article/2634110
** https://www.cnbc.com/2018/01/09/as-credit-card-debt-hits-record-high-a-trick-can-save-you-thousands.html
https://www.wsj.com/articles/u-s-household-debts-hit-record-high-in-first-quarter-1495033206
http://www.foxbusiness.com/features/2017/05/17/u-s-household-debts-hit-record-high-in-first-quarter.html
*** https://www.cnbc.com/2018/01/09/employers-brace-for-the-loss-of-an-immigrant-work-force.html
**** http://stopcontinentaldrift.blogspot.com/2017/11/pouring-gasoline-on-fire.html
https://www.wsj.com/articles/small-firms-poised-to-spend-more-on-plants-equipment-1409785285
***** https://www.cnbc.com/2018/01/10/home-equity-hits-record-high-heres-how-homeowners-are-spending-it.html