Get Ready for Corona Inflation

A quick post, as today’s message presents a challenging fact. Sometimes the truth hurts and better on a Friday than a Monday! Keep reading, though, for an inspiring conclusion.

Fact: Prices for discretionary (and non-discretionary) items are about to go UP. All one needs to look at is the spike in residential home prices that began in mid-2020 and is still going. Demand for suburban homes has skyrocketed due to the work-from-home and leave-big-cities trends, among other major factors. As learned in high school and college economics, as demand increases generally so do prices.

Travel and hotels will probably see the most noticeable price increases post Covid.

Photo courtesy of Sean Sullivan, Cruz Bay, St. John USVI.

Demand for nearly everything we want and enjoy has been artificially and meaningfully suppressed by the pandemic and public policy around the pandemic. Watch out for major, renewed demand in the following:

  • Travel
  • Restaurants- both inexpensive and expensive
  • Leisure
  • Fitness (although demand varies here…)
  • Sporting Events & Tickets
  • Music concerts
  • Movie theatres
  • Trips to museums and symphony
  • Kids’ sports camps…

You name it, things we love have been off-limits. As the shutdowns now begin to subside with herd immunity increasing in most parts of the USA and world, demand for TRAVEL and RESTAURANTS is going to skyrocket. Travel and hotels will probably see the most noticeable price increases. (Again, demand and supply.) Have you checked out an airline fare to Florida or anywhere desirable recently? Wait ’til summer and fall!?! Last year most airlines were crushed by lost revenue from forced free cancellation policies and have ground to make up. Restaurants need to “make hay when the sun shines” and will be justified in raising prices a bit – perhaps cocktails will be the only menu item where prices stay level.

One conclusion could be that post-corona inflation is a necessary step to getting the country and world back to normalcy. It may be painful and expensive for a while. AND, as one long-time client told me as he sent the amazing photo below taken by his son, “You need rain first, to get a rainbow. Looking forward to 2021.”

*Photo courtesy of Sean Sullivan, Cruz Bay, St. John USVI.

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