2013 Economic Considerations: Expect Inflation to Become an Issue In 2014
With the economy improving each month it’s easy to be lulled into a false sense of security with respect to the prospects of a much better year in 2014. This belief could be a tad optimistic given the risk of inflation in the coming year. Consider the following:
- Skyrocketing health care cost:
With 80 million health care plans that don’t meet the new health care standards, most people should expect huge increases in health care cost in the coming year, despite politicians promises to the contrary. Health care companies are poised to use the changes in the health care law to stick it to the American public. It’s also interesting to note that politicians excluded themselves from mandatory health care requirements that apply to the rest of the population.
- Income taxes:
With increases in financing over $17 trillion in U.S. debt, the government must take aggressive steps to control the skyrocketing deficit. The cost to fund the U.S. deficit are guaranteed to be passed along to the American public through higher taxes and fewer services. Why is it impossible for the government to trim the 2014 budget by the same 2% they demanded every U.S. citizen to contribute in additional payroll taxes earlier this year.
- Interest rate increases on consumer debt, automobiles, and home mortgages:
Everyone should expect interest rates on all debt to increase significantly. We can also expect a resurgence of unethical lending practices and more stress for delinquent borrowers. (The more things change, the more they stay the same.)
- Massive increase in state tax rates:
Underfunded pension plans and substantial deficits will lead to significant increases in state income taxes and property taxes in many states. This will become a major problem for residents that live in states that have billions of dollars in liabilities. Conversely, states like Florida, that have a healthy balance sheet and no state income tax, can expect a major influx of residents wishing to flee states with major personal tax burdens.
Overall, 2014 will provide a mixed bag depending upon which state you live in. Inflation will once again become an issue for everyone in the United States, putting even more fiscal stress on the average American family.