Menu
NMS Consulting Logo
  • About
  • Industries
  • Services
  • Locations
  • Team
  • News
  • Insights
  • Case Studies
  • Contact
  • Events
  • Free Consultation
  • Packages
Close Menu

Inflation – Where Is It?

 

It’s the economy, period.

 

inflation

 

Firms face economic risks. Among the most prevalent yet neglected risks is inflation. From a strategic planning perspective, firms must understand where inflation may be hiding in the economy. By identifying inflationary markets, firms can improve strategic planning processes that are centered around strategic initiatives over the foreseeable future. Inflation impacts the consumer and subsequently will lead to pricing issues for goods and services. When inflation impacts one or more markets, the consumer faces a higher cost structure, which can negatively impact price sensitive firms by reducing demand for goods and services that must compete in the market for consumer expenditures.

Inflation as measured by the Producer Price Index (PPI) and the Consumer Price Index (CPI) does not tell the entire story. Inflation is responsible for creating ‘bubbles’ or that which are called bubble markets. Bubbles currently exist in the housing market, particularly for housing at the higher end including luxury housing. The real estate market is subject to location, therefore, not all locations are affected. Yet, a number of locations are experiencing this type of inflation. Firms that depend on business generation from locations that are experiencing asset bubbles may be negatively impacted. The Tampa Bay region is just one location that is currently experiencing real estate inflation. Firms operating within the Tampa Bay area may not be negatively impacted now, at least not until there is a broader economic downturn that reduces demand for goods and services and thus hampers business growth by reducing revenues and profitability.

IMG_20200807_021351_edit

 

Inflation is also hiding in the stock market, notably in technology stocks and other ‘high growth’ stocks. High growth stocks do not pay dividends and so investors chase growth in the hopes that one day these companies will accumulate retained earnings and eventually payout a dividend. This activity results in a rising price/earnings ratio or a P/E multiple. Therefore, stocks that are experiencing an inflationary bubble will have a high multiple, a multiple that is at least higher than the P/E for the S&P 100. Firms should identify the inherent risks associated with bubbles in the equities market and how such bubbles can impact their investment strategy. Additionally, firms that manage or oversee employee 401ks should also understand where inflation is hiding.

What NMS Consulting Can Do For Your Firm

NMS Consulting can provide your firm with business and economic forecasts, statistical analyses as well as broader conceptual strategic planning consulting services. Our strategic planning services can provide a risk analysis and a market analysis that supplements the main industry analysis. Recommendations for your firm will reflect our expertise and strong understanding of global macro economic factors and regional economic factors that will directly influence your business operations. NMS Consulting can provide economic and financial consulting services to large corporations as well as to proprietors, SMEs, and LLPs/LLCs.

 

About the Author

vidia ramdeen

Mr. Ramdeen has a 16 year track record with a focus on financial services, corporate advisory, and wealth management. Vidia also has public sector, healthcare, higher education, and non-profit consulting experience, providing diverse services to local, state, and federal government. Mr. Ramdeen is a Six Sigma Black Belt and has more than 10 years of experience as an independent consultant providing third party consulting services that involve LEAN consulting, varied analysis, research and recommendations.‎

NMS Consulting’s Harry Moore featured in LABJ’s Bankruptcy & Restructuring Roundtable Discussion NMS Consulting Appoints Bill Bentaieb, ex-Deloitte & McKinsey, as Director – Digital Transformation

Related Posts

Digital Advertising Gross Revenue Tax

Insights, NMS

Are You Prepared for the Digital Advertising Gross Revenue Tax?

Graphic - Article_ The Power of Digital Governance (1)

Insights, NMS

The Power of Digital Governance

image_2021-02-17_115711

Insights, NMS

Webinar Recording – Digital Transformation & the 4th Industrial Revolution (4IR)

Back To Top
NMS Consulting Logo
  • Privacy Policy
  • Terms of Use
  • Sitemap
  • Search
  • Careers
433 North Camden Drive Suite 725 Beverly Hills, CA 90210
©2021 NMS Consulting, Inc.
NMS Consulting, Inc., including its subsidiaries and affiliates is a consulting firm and not a registered broker dealer, registered investment advisor, certified public accounting firm or law firm. All Rights Reserved.