In 2013, the Federal Reserve initiated a comprehensive survey, The Report on the Economic Well-Being of U.S. Households, which attempted to provide a snapshot of people’s financial lives. At that time, just five years after the 2008 financial crisis, many were still reeling. Some had lost homes, others were forced to tap savings and retirement assets, and many were still out of work and/or contending with fewer hours.
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Worries about rising inflation have spooked stock and bond investors. As a reminder, inflation occurs when the prices of goods and services rise and as a result, every dollar you spend in the economy purchases less. The annual rate of inflation over from 1917 until 2017 has averaged just over 3 percent annually. That might not sound like much, but consider this: today you need $7,272.09 in cash to buy what $1,000 could buy in 50 years ago.
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We knew that a stock market correction was coming, but why then did everyone seem so shocked when it arrived on Februarys 8th? Corrections, defined as 10 percent drops from the recent highs (January 26th), usually occur every year or so. Until last week, it had been two full years since the major US indexes had corrected. In other words, we were overdue for a drop.
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