Next Few Months

It’s going to get interesting in the next few months, Maybe not quite shooting zombies in the street interesting. Maybe. 

Okay, that sounds a bit over the top, but when millions of people run out of coffee they’ll look like zombies. It’s not that I’m expecting coffee to disappear by the end of the summer. What I am preparing for is for food prices to double by then. Double. For real. I’m also preparing for $10/gallon gasoline.

Those are big increases from my earlier expectations. By winter I’d expected $5 gas and maybe 30% more for food. What I had not factored in sufficiently was inflation. We have official inflation numbers but in the real world it already seems like 20 – 30%. That’s for the stuff we actually buy, not the official basket of goods they measure. Another factor will be less food making it to market at the end of the fall. Weather and war are major disruptions. 

A key thing to keep in mind is that about 2/3 of Americans are already living paycheck to paycheck. There is little slack in their budgets already. 

What’s going to give? Obviously people will be eating as cheaply as possible. It’s going to be rough again for restaurants. The financial system is in for a shock. People will charge up their credit cards to put the day of reckoning off into the future. Eventually they won’t be able to make those payments. When times are tough unsecured debt is one of the places to suffer first. The banks will raise interest rates in an attempt to recover that money, only to make matters worse. 

The housing bubble will definitely burst. There are signs of that happening in different markets. Not only that, there were plenty of areas where the real estate bubble never happened in the first place. Some places never recovered from the 2008 crash. 

I’m I sure that’s what the end of summer will look like? Of course not. If I could time things perfectly I’d be rich. These things could happen much later and/or not to the full extent I’m expecting. With any luck at all I’m being pessimistic. I am preparing for the $10 gas and doubling of food prices. If that doesn’t happen to the full extent it will feel like a win.

If it’s worse, at least I’ll be partially prepared. 

-Sixbears