Still Fears of Inflation

Gas prices are up. According to many sources, there's little or no chance that they will be coming down any time soon. I'm amazed; we haven't seen prices like this since Katrina, and yet there have been no severe weather events nor nasty earthquakes to impact the production or movement of domestic gas. But apparently, we aren't producing enough and the summer driving season is upon us, so the prices have gone through the roof.

With gas up, prices for consumer goods are likely to head up too. Most consumer goods are trucked around the North American continent, and if truckers pay more for fuel, you'll pay more for your tasty Florida oranges, or fresh California produce. Anything which makes it way to you using gas or diesel will be more expensive.

That means inflation. That means the Fed is likely to look at interest rates, and could even decide to increase them. In fact, interest rates -- while still good -- have been inching up. It will be interesting to hear what the next Fed statement says about inflation.

Frankly, I'm thinking it's time to be very cautious in the buying and selling of houses -- at least for my family. With the housing market still faltering, and the economic engine less than fully tuned, it could mean a rough ride.

While open-houses are my favourite "sport" at this time of the year, I'm busy refinishing our basement. We have a mortgage loan at a good rate, and payments we can handle. We're going to invest in the house we have, and do as much of it as we can, so we don't increase our debt load. We're also going to stay put. Housing prices are just too darned high for an economy that might just miss a few beats in the near future.

I'll be on vacation for a couple of weeks, taking in a few of the local sites with the family -- and using as much public transit as I can.  

Michael Chantrel 

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