Andrew Batson wrote a must read piece in yesterday’s WSJ titled “Inflation, Spanning Globe, Is Set to Reach Decade High”. 

Yes, we agree that economic theory can be a bit tedious now and then (understatement of the day), however, in these times of unprecedented economic change, it pays more than ever to stay abreast of the ebbs and flows in US and world economies. 

Batson convincingly presents data that demonstrates inflation is on the rise here and abroad, and makes the case that our atypical response (to inflation) of lowering interest rates is complicating the world picture a bit. 

Why follow this information as a real estate investor?  No question, world economic issues impact the US economy, and any and every piece of data you can better understand will put you that much farther ahead in the game.  The struggling dollar has a large impact on global inflation, and different nation’s responses to the dollar (particularly those who link their currencies to the dollar) will impact our economic recovery in turn.

More concretely, inflationary price increases cut consumer spending power, particularly among those with lower incomes.  Your costs go up while businesses and individual tenants have less spending capacity decreasing income. 

Batson’s article is a good one, track this one down.

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