After a couple of years of inflationary pressure, money expert Clark Howard says economic trends indicate that we are entering a new phase.
Clark: Prices Will Fall On Many Items
“Inflationary trends are lessening, and this is a nearly worldwide phenomenon,” Clark says. “The next cycle worldwide is going to be where a lot of these prices we’ve had — which are so much higher than they were pre-COVID — a lot of them are coming back down below where they’ve been.”
So Clark is saying many of the items you want and need are going to be cheaper later — not necessarily right now.
“This is a prediction of the future that you can take to the credit union,” he says.
Why Clark Predicts Prices Will Drop On Many Items
Clark says price pressures will decrease due to several factors including:
An Oversupply of Manufacturing Capacity
“We have an excess capacity now of cargo ships and trucks,” Clark says. “Trucking companies are complaining that their volume is falling. FedEx has complained about this. A number of trucking companies have gone insolvent.”
While the situation is a far cry from the days of 2021 and early 2022 when U.S. ports were backlogged with cargo that needed to be unloaded, this is the case right now.
A Period of Disinflation
“Disinflation is when the rate of inflation trends steadily down,” Clark says. “It doesn’t go straight down; it’s got a jagged edge to it.”
A period of disinflation is generally viewed as a positive development for the economy, although a temporary one.
A Period of Deflation
“The next trend is deflation, which is when goods are going to be cheaper than they were before,” Clark says.
What’s the Difference Between Disinflation and Deflation?
With deflation, the inflation rate must plunge below the threshold of zero, which will translate into stark price drops across the economy.
With disinflation, the inflation rate falls more gradually and creates an incremental ease on pricing throughout the marketplace.
The culmination of all these factors means one thing for consumers: Relief for your wallet is coming.
“The much higher prices we’ve seen for consumer goods have been step by step evaporating, and in 2024 we’re going to see lower prices on a lot of goods,” Clark says.
Action Plan: What You Can Do To Capitalize
Save Now …
Clark says to take advantage of cheaper prices, you need to park your money into savings vehicles that are primed to grow.
Some of our faves include:
“Each dollar you make that is used to purchase goods is going to go further in 2024 than even where it is right now, so that’s why this is a great time to build up savings.”
Buy Later
"If you're being really a good manager of your cash, and you're getting better deals in savings accounts, money market accounts, all plus 5%, it's better to sit on your money and let it earn and then next year, whatever you're interested in buying is cheaper, you buy then," Clark says.
Final Thoughts
Clark says times are a-changing for the economy. Brace for the adjustment by looking to save money in the short term.
Read our guide on how to save money.
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