It's when prices rise and goods and services suffer in quality. There are signs of skimpflation all around us. Maybe you are seeing longer waits for food delivery, fewer condiment options at the convenience store, and bare-bones customer service at the airport or hotel reception desk.
The COVID 19 pandemic is closer to the two-year mark and consumers are noticering that service just hasn't been the same at the local restaurant, the airport or hotels. Businesses across the country are facing inflationary pressures that are showing up in the details. Travelers are noticing that hotels are no longer providing daily housekeeping services and that breakfast buffets have turned into grab-and- go cereal and coffee. Companies are choosing to skimp on goods and services instead of raising prices, creating a different type of inflation.
Our team of experts discussed how to inflation-proof your portfolio during these challenging times. Susan McGinnis is the host of the 45 minute conversation. You can see the excerpt above or watch the full webinar below.
How do I play the Inflation Trade?
David Schassler, Portfolio Manager of the Inflation Allocation ETF, RAAX, at VanEck, is concerned about the stagflationary scenario.
00: 38: 15 Corporate earnings are under pressure. The wage inflation is putting pressure on the margins. The employees are taking the reins and demanding higher wages. Schassler says he is looking for companies that benefit from higher inflation.
Some businesses are adding surcharges to their bills that could cause you to miss it if you are not looking. The surcharges can be incurred in the form of a COVID- 19 fee, Coronavirus fee, PPE fee, Sanitation Fee, or Cleaning Fee. Skimpflation is one measure that isn't being captured in government data despite its seemingly transitory nature, a measure that isn't being captured by the national labor shortage and supply chain disruptions. Will there be a breaking point for consumers and businesses as the quality of service declines?
In the 1970s, there was a decline in bonds and stocks. While the current fiscal and monetary policy environment is different, the current investment landscape is not one for investors to be complacent without reassessing and diversifying assets.
Nancy Davis, Founder and Chief Investment Officer of Quadratic Capital Management, is concerned about the potential stagflationary environment and its effects on a traditional 60 -- 40 portfolio.
The big bugaboo in a room that hasn't been talked about, is the one that hasn't really been talked about. Earnings will be weighed down by wage pressures, as companies raise prices just enough to offset wage hikes, or will shareholders bear the brunt of lower earnings.