Welcome back to Between bells,
everyone cost of living here in the US getting higher and higher as
inflation pushes up the prices of everything from food and gas and housing.
Well, according to a recent ipsoS poll,
more than two thirds of people around the world are feeling
that squeeze and low income households are feeling it the most
joining us now.
Garrett erosion, managing partner at Wave Capital Partners, Garret,
it's good to have you on the show
wondering if you can break down some of the
factors driving these expensive costs of living right now.
Well, thank you so much for having me.
I mean, where can we begin when you think about existing homeowners,
are they thinking about refinancing?
They might be able to get a better rate
on their mortgage if they refinance or homebuyers,
potential homebuyers thinking about buying a home later this year,
we're not seeing the same type of
rates as we did last year, where they were below threes.
Now we're going to be seeing like mid 3.5 to even four.
So when it comes to buying a home, we're experiencing inflation,
which is driving up mortgage rates.
When you think about the cost of food, the cost of gas, the cost of clothing,
shipping costs, shipping products from Asia to the United States,
the longer they're at the docks before they can depart
two trucks to get it to major retail stores that's
causing a lot of small businesses to deal with the
effects of higher prices and we're dealing with wage inflation,
you know,
wages can't keep up with high inflation and
that's really being a downer for employers.
I'm glad that you mentioned wage growth,
we know it is failing to keep up with the rising inflation.
How much longer do you think this can actually continue before the effects come
detrimental for a lot of these low income families?
As we mentioned, those who are really disproportionately affected by this.
Well,
if you think about it and I believe that
you know low income workers and median income workers,
they have to pay close attention.
I mean when you hear about the President's speech yesterday talking about how
the Federal Reserve their roles are to
maximize employment and to stabilize prices.
Well, if you think about the rate hikes three, maybe even four this year
that will
pull down inflation which will help those
consumers and average to low income workers.
But then you don't want to have a reverse effect of the economy not being able to
create jobs and not being able to have
good paying jobs to provide for their families.
When you think about your grocery store bill.
I think that you know, consumers should think about if I don't have to
um buy in quantity.
Think about buying in quantity on a very select basis if you know that you don't
have to buy all the time and make sure that you are cooking at home,
make sure that you're
going to various grocery store outlets,
seeing what our competitive pricing and get the most out
of your grocery shopping and yes cook at home.
I mean dining was up 6% last year and if you
think about people it's a luxury to go out to eat.
It's a luxury to travel. It maybe even a luxury to get your hair cut or even
go get a car wash.
I mean that's really what it boils down to and I think that people
have to think about their own budget and think about how could they save,
How could they make their uh pocketbooks and bank accounts stretch further.
Yeah. Garrett a lot of good insight there for families during this time.
But also you touched on something with the Fed interest rate hikes in 2022.
Kind of looking to solve some of the inflationary concerns that we're seeing.
Do you think it could have the opposite effect and end up
unfortunately in a recession?
I think potentially it's something we have to look at.
I think that it could be where we end up in
a recession because inflation is the highest in 40 years,
7% according to CPI data in the month of December of last year, year over year.
And when you think about how inflation has never been this bad in 40 years.
Plus on top of a pandemic, we didn't have a pandemic back in 1982.
And so what else can the Fed do besides raise rates.
But what the average american can do at home is talk to your neighbors,
talk to your fellow business owners, you know,
I'm in a business where I'm an entrepreneur and I think about creativity,
I think about multiple revenue streams and when I look at the local farmer's market,
you can learn from a lot of people,
people are thinking about how can I open up a
new small business to meet the needs of you know,
local people in their area, you know, clothes are expensive,
so people at farmers markets, they're selling their own clothing line products.
Organic farmers are thinking about how to sell products to local consumers,
where it can compete with big major retail stores,
it's a lot of complications, but in a lot of confusion and chaos,
there has to be calmness and there has to be clarity and I think that people
and I'm a relationship builder and I believe in building relationships and I
believe in talking to people who have great ideas and I think that it
really boils down to what are people saying around you and coming to consensus
because a lot of great things can
happen with entrepreneurship and entrepreneurial spirit.
I really appreciate all of this perspective that's Garrett corrosion,
a managing partner at Wave Capital Partners