A few months ago my husband started talking about buying a car. He's been driving a vehicle that looks more like a golf ball after surviving several VERY INTENSE hail storms. Generally speaking, I am a "drive it 'til it dies" kind of girl. But he is a bit of a gear head and things with motors make his precious heart happy and he'd been looking at Jeep Gladiators. I was not convinced for several reasons.
1. They aren't practical
2. They are expensive
3. They are new and so there aren't very many options for a used one out there.
4. I think they are ugly. And it's all about appearances, right?
But I told him to ahead and take a look anyway. And this begins our lesson on inflation. Inflation is defined as the general upward price movement of goods and services in an economy. The key word is “general.” Inflation tends to be uneven and affects the price of some items more than others.
If you’ve been in the market for a used car, you’ve learned a critical economic lesson about the “uneven” side of inflation. The overall rate of inflation has been 5% for the past 12 months. Meanwhile, the average price of a used car is up 30% from a year ago.1,2
Various factors drive used car prices, but most of the trouble links to the global microchip shortage.3
Demand for used cars may well slow later this year as automakers return to normal production levels. As the market shifts, some people who bought used cars may learn another key economics lesson: they might owe more for their car than what it’s worth as prices return to historical levels.4
At first, I was not so concerned. Our little golf ball of a car ran just fine, so we decided that this was NOT the right time to buy and we would wait out the shortage on microchips and hope that things improve over the course of the next year. Then, about a month ago, I was in an accident in the little golf ball (I am overall fine, thank you), and the car was totaled.
Turns out, we were in the market for a car whether we wanted to be or not. Luckily for us, I have been working in this industry for a long time and overall we have made some good (although often difficult) financial decisions. So even though we did not WANT to go buy a car now because it was not the best time, we were able to. And we were able to get my husband his impractical, ugly, but super fun JEEP. :) I must admit, it's grown on me. The husband is happy, the kids are happy, what more could a mama want?
If all the recent inflation talk has you uneasy, or you have questions about things like financial planning, emergency savings or interest rates please contact our offices. We'd welcome the chance to hear about your experiences and offer our services.
1. CarandDriver.com, June 5, 2021
2. APNews.com, June 22, 2021
3. ConsumerReports.org, June 10, 2021
4. Forbes.com, June 14, 2021
The forecasts or forward-looking statements are based on assumptions, subject to revision without notice, and may not materialize.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.
Jeep Gladiator. To Buy or Not to Buy?... A lesson on inflation
August 10, 2021