On my regular morning walk with Kara this morning I ran into a neighbor walking his two Great Pyrenees who I happened to know was a dentist. I had received an email from my dentist a few days ago advising me that they were seeing patients again so I asked him if he were back at work and how he was finding it. In short it’s difficult. Observing the proper precautions is expensive, he can’t treat as many patients, and everything is more expensive.
Where’s that deflation that some economists were predicting? I certainly haven’t seen it. Food and other consumables are more expensive. Gas prices are holding steady as is insurance. I expect the prices for medical care to rise sharply.
The inflation is coming.
Right now excess liquidity is going into asset inflation (stocks, land).
But this time I think it is going to leak into everyday stuff because the Fed cannot withdraw the liquidity (imagine the social unrest in the ensuing deflation).
I honestly don’t know what is going to happen with the economy. This seems to be historically unique which makes the effects more difficult to predict – not that economists were ever any good a prediction.
But at the ground level, I’m seeing the same thing – places are opening, but are not open enough or don’t have enough business to cover expenses. Construction is still strong, but the tight construction labor market here is even tighter now.
I don’t know how this all ends but I don’t have a lot of confidence in the various predictions I’ve been reading.
The great mystery is velocity.