My Dad started his career at Prudential Financial in the late 1970s. His Prudential financial practice was doing well and in the early ’80s he qualified for an educational award conference in Hawaii.
Now, just because Dad was doing well in the very tough business of financial services doesn’t mean we had a lot of money at home. The early ’80s was a tough time in the Region, so this Hawaii trip was a huge deal to our family. Mom insisted they take me and my brother (ages 9 and 12), as she correctly surmised this might be the only time they would be able to afford such a trip. To this day she still speaks of the trip with joy in her voice.
I have some solid memories of this trip, but they are from a distinctly 12-year-old point of view. My strongest memories are my excitement at finding a Space Invaders arcade game in the lobby of the fancy hotel where we stayed, Mom forcing us to eat strange Hawaiian food to learn about “culture,” the discovery of a new restaurant concept called the all-you-can-eat “smorgasbord” where my brother and I could gorge ourselves almost to the point of illness. Oh, and of course the jet lag. I remember waking up every day on the trip at 3:00 a.m., and not being able to sleep when we got home. This part of the memories are brutal.
This memory of jet lag was one reason why I never felt the need to return to Hawaii as an adult. In my mind Hawaii just seemed hard to get to, and as a dad who would be paying for the trip, I knew it was super expensive. The combination of these factors left me with no urge. My wife, however, felt differently. She’s always pined to go, and with one adult daughter on her own, and two kids at college with spring breaks that did not line up with our youngest son Ethan’s, we cut a deal. We would do Hawaii now that I only had to pay for three people instead of the whole brood. We just got back.
Well, Hawaii (Oahu and Maui) is certainly other-worldly amazing. The beauty of the volcanic earth meeting the sea, the marine wildlife, the perfect weather, all combined to create an amazing experience. The travel was in fact brutal, especially on the way home, and then there were the costs.
Oh my, the costs. The thing about traveling to Hawaii (particularly the way back), is it provides geographic exposure to three quarters of the country. By the time Southwest Airlines got done tormenting us with flight changes I got to experience four airports coming back to Chicago, each about an exhausting four-hour air or layover time from each other. Which means I bought a cup of coffee in each airport along the way. Medium brewed coffee, not a fancy latte mind you, in Maui $5.50, San Diego $4.50, Phoenix $3.75 and Chicago $3.50. What is going on here?
Then there were the food costs. My brother has famously coined the legendary phrase in my family, “vacation is vacation,” which means if you are going to overindulge or overspend, vacation is the time for it. I have happily come to know the wisdom of this phrase, so I tend to let myself enjoy myself on vacation. But when a 10-ounce strip steak is on the menu for $70, or a cheeseburger in an airport is priced at $25 and every pool side cocktail is $18, including beer, I find the enjoyment of the experience kind of being stripped away. I shouldn’t have to evaluate every menu as a major financial decision; something has to give.
The government says general prices, or inflation, as measured by the Consumer Price Index (CPI) are up 7.9% over the past 12 months and economists predict it may go higher. The Federal Reserve is now talking about a newer inflation metric called the Personal Consumption Expenditures deflator, an index that factors in consumer choices as part of the inflation metric.
Which means if the steak on the menu costs $70, Marc may just choose the eggplant parm for $45, and thus “deflate” the real impact of inflation. It certainly deflates my meal.
I’m continuing to worry if these price trends keep on going up, people, myself included, are just going to “tap out,” buckle down and stop spending. If this happens enough across the country, the economic term for this is recession.
The Federal Reserve has started to address the inflation in our economy through interest rate hikes and policies reducing the money supply. While these policies may disrupt financial markets, they are clearly necessary at this point. But they are also blunt instruments and I struggle to see how they will being down the price of my steak anytime soon, and we may be running out of time.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stock investing includes risks, including fluctuating prices and loss of principal. Marc Ruiz is a wealth advisor and partner with Oak Partners and registered representative of LPL Financial. Contact Marc at firstname.lastname@example.org. Securities offered through LPL Financial, member FINRA/SIPC.
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