Inflation – it’s the invisible tax that keeps on taking, no matter what you do. Americans are feeling the sting, and the numbers don’t lie. A recent consumer survey shows that inflation is now the #1 concern for 2025. Wall Street’s on the same page, calling a revival of inflation the top risk for equities this year.
By the Numbers
Let’s break it down. Inflation peaked at a record high of 9.1% in 2022, and while it’s down from that all-time high, it’s still hovering between 2.6% and 2.8% since May 2023. While that sounds better, it’s not exactly a relief. Cumulative inflation since 2020 is a staggering 22%, and some sectors have been hit even harder. Food and beverages have jumped 29.25%, housing’s up 29.27%, and transportation? An eye-popping 44.96%. These numbers aren’t just statistics—they’re the very real costs that are eating into your paycheck.1
Inflation Expectations Grow
Consumer surveys are showing a sharp spike in long-term inflation expectations, which is never a good sign. When consumers think prices are just going to keep climbing, they rush to buy big-ticket items now, before prices go even higher. That behavior, while understandable, only fuels the fire. These expectations can influence wages, spending habits, pricing decisions, and even monetary policy. If inflation expectations go unanchored, they can perpetuate inflation, making it harder for the central bank to tame prices.
Inflation Continues to Rise
Economists are bracing for inflation to remain sticky in 2025. Both the Personal Consumption Expenditure (PCE) and the Consumer Price Index (CPI) saw increases in December. The Federal Reserve had hoped that inflation would calm down after their aggressive rate hikes, but that hasn’t really happened. The Fed now sees core inflation going higher in 2025 than their original prediction.
Wall Street’s not so optimistic either—58 economists surveyed recently agreed with the Fed’s new outlook. Meanwhile, BNP Paribas issued a grim 2025 outlook. They see the Fed pausing rate cuts due to a substantial rise in inflation from late 2025 into 2026. They predict inflation will hit 2.9% by the end of 2025 and 3.9% by the end of 2026. Goldman Sachs and Wells Fargo also increased their 2025 inflation forecast. That's why Goldman told their clients to "Go for gold."2
The reality is, inflation is stuck above the Fed’s 2% target, and there’s no telling when—or if—it’ll ever get there. Even worse, the Fed and Wall Street fear a new spike in inflation is looming.
Interest Rates and Inflation
The Federal Reserve’s aggressive rate hikes were meant to tame that record-high inflation we saw a couple of years ago, but they've trapped themselves. After seeing inflation start to relent, they began cutting rates last September, hoping to spark some growth. But the Fed’s saying there may be no more rate cuts in 2025 because lowering rates could just fan the flames of inflation again. If they do cut, it won’t happen until at least June. Forced to choose between stalling the economy and stopping inflation, the Fed's priority is inflation. So, when it comes to high interest rates, the President of the Richmond Fed said, “I prefer to stay restrictive longer.”3
Pro-Growth Dangers
Some economists think President Trump’s pro-growth agenda, including tariffs, tax cuts, and deregulation may also stoke inflation. Historically, a 1% increase in tariff rates has led to a 0.1% rise in annual inflation, on average. Then there are the tax cuts, which could contribute to a growing deficit if spending cuts aren't made. If tariffs go up and countries retaliate, we could see a global slowdown. Which, when combined with inflation, can result in stagflation. 4
Geopolitical Conflict
It’s not just the domestic policies causing inflation. Geopolitical risks are making matters worse. The ongoing war in Ukraine, instability in the Middle East, and OPEC’s decision to extend its output cuts are all shaking supply chains, driving up energy costs, and further inflating prices. The energy sector is a key driver here—rising energy costs push up the price of everything, from transportation to manufacturing, and this trickles down to the consumer.
"No Landing" in Sight
We are also facing the threat of a “no landing” scenario. A "no landing" scenario brings a tough mix: continued growth along with persistently high interest rates and stubborn inflation. The ripple effects are widespread as markets become volatile and stock prices face pressure. Even bond investors aren’t immune, as higher yields can lead to losses on older bonds. Companies with significant debt find it harder to refinance, while inflation eats into profit margins. Government debt costs rise, adding strain to public finances. It’s an economic environment full of challenges, with no easy solutions in sight.
Inflation and Your Savings
And let’s not forget: inflation is an invisible tax. It erodes your savings, depresses the value of your investment portfolio, and makes it harder for everyone to plan for the future. The dollar doesn’t stretch as far as it used to, and your purchasing power shrinks bit by bit. While the Fed works on controlling it, there’s no guarantee we’re going to see relief anytime soon. The longer inflation sticks around, the more of your wealth it will quietly eat away.
So, what’s a solution? Physical assets like gold and silver have historically been a safe haven during times of economic uncertainty. If you want to protect the value of your nest egg, it might be time to consider diversifying your investments with a Gold IRA. A tax advantaged Gold IRA combines wealth building with the wealth protection of physical precious metals. American Hartford Gold can explain how gold and silver can safeguard your portfolio from inflation.
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Max Baecker is the President of American Hartford Gold (AHG), the nation’s largest retailer of precious metals. He leads American Hartford Gold’s mission to help clients achieve long-term financial security with physical gold and silver.
Under his guidance, American Hartford Gold has delivered billions of dollars’ worth of precious metals to thousands of satisfied clients.
Max's dedication to upholding American Hartford Gold's industry-leading standards is reflected in its accolades. American Hartford Gold has made numerous high-ranking appearances on the prestigious Inc. 5000 List of America’s Fastest-Growing Private Companies. AHG holds an A+ Rating from the BBB and a 5-Star Rating on Trustpilot from thousands of American Hartford Gold reviews. American Hartford Gold is the only precious metals company trusted and recommended by Bill O’Reilly.
AHG offers investment-grade gold and silver coins and bars at competitive prices. Clients also benefit from its buy-back commitment with no back-end fees. To learn more, visit American Hartford Gold.
Notes:
1. https://www.in2013dollars.com/us/inflation/2020?amount=52000
2. https://finance.yahoo.com/news/wall-street-is-concerned-about-an-inflation-resurgence-in-2025-153029424.html
3. https://www.bloomberg.com/news/articles/2025-01-03/fed-s-barkin-says-2025-outlook-positive-inflation-to-move-lower?embedded-checkout=true
4. https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr935.pdf
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