Founding Principal & Managing Director, Craig Robson
The recent ransomware attack on Colonial Pipeline caused drivers to panic and fill up their gas tanks. For those of us old enough to have lived through the ‘70s (full disclosure, I was 10 years old in 1979), the gas shortage earlier this month was an eerie reminder of what happened then.
While my biggest complaint about the gas shortage in the '70s was waiting in long lines with my family (typically drinking a Yoo-hoo, while sitting in the front passenger seat with our dog, my bare feet hanging outside the window, in 90-degree weather… oh to be young again), I vividly recall my father discussing his frustrations and concerns, not primarily with the gasoline shortage, yet with inflation. I would periodically ask my father to explain inflation, what caused it, and how to fix it. Ironically, it came full circle as my kids asked me the same question, while driving around metro Atlanta looking to fill up our gas tank.
Simply put, inflation occurs when demand exceeds supply. An economic result of inflation is price increase and that’s why inflation is on the mind of so many people. A prime example, Google Trends searches for the word inflation are running at the more than twice the rate we have seen at any other point in the past five years.1
I will not go into detail explaining inflation in this Craig’s Corner, I will however state The Federal Reserve System has an important role regarding inflation. They decide how, when, and the frequency in which to adjust interest rates, and that’s a key factor in determining if we have more transitory inflation (i.e., higher than we have experienced over the past decade, yet manageable from an investor perspective), or something more concerning like the 1970s during the Nixon or Carter administrations. Time will tell how this latest round of inflationary concerns plays out in the months and years ahead.
To get a real-time snapshot on how much demand is in our economy, the next time you are out shopping or running errands, I encourage you to count how many Help Wanted signs you come across. I did this recently and I counted eight, which included a gas station, Dunkin' Donuts, Steak and Shake, a grocery store, and a pharmacy, just to name a few.
I will end this Craig’s Corner with some lyrics from Kenny Chesney’s song, “Summertime.”
And it’s two bare feet on the dashboard
Young love and an old Ford
Cheap shades and a tattoo
And a Yoo-Hoo bottle on the floorboard
Perfect song on the radio
Sing along ‘cause it’s one we know
It’s a smile, it’s a kiss
It’s a sip of wine, it’s summertime
- Craig Robson
- Founding Principal and Managing Director