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Discretionary Spending vs Inflation

Are Sales Increasing?

Could be a sign the economy is contracting

 

 

When inflation hits, many consumers who feel the pinch will do the obvious and cut back on their spending.

Theoretically, for every penny of higher inflation, a certain number of consumers will go under and not be able to make ends meet. It sounds implausible that one penny more would cause people to go bankrupt but since price increases are infinitesimal and their effect on consumers is incalculable, the threshold to go from liquid (able to afford things) to illiquid (no longer make ends meet) can be stated as fact that a penny more can push at least someone, if not many someones,  into financial ruin.

Consumers have many expenses. Some are the necessary costs we regard as must be paid in order to survive such as the food we eat and the energy to heat our homes while other expenses are ones that you can do without.

The “must-have” expenses are called essential or non-discretionary spending while the ones we can do without are called discretionary.

As inflation rises, the discretionary items are eliminated first by the consumer. One by one the consumer might start cutting back on the things they want but don’t absolutely have to have in order to keep within their budget.

As inflation rages on, if there is not an increase in income, one by one the discretionary purchases are eliminated.  Many items are deemed more discretionary than others. Dinners out, expensive foodstuffs, new clothing, vacations and entertainment purchases might be the first to go while items that are deemed more important, but still discretionary, might be eliminated later.  These might be music lessons for the kids, keeping the house at a comfortable temperature, streaming services, or gym memberships.

What things one eliminates and in what order they are eliminated in is obviously different for different people and what one family cuts back on might not be the same as what another family chooses to eliminate.

When looking at the economy as a whole, there are certain sectors that can signal the start of discretionary cutbacks. These usually include entertainment, dining, retail and travel. Next might be personal hobbies, subscription services and self-care services. Medical services could also be reduced as budgets get tighter as well as a host of other discretionary goods and services.

You can tell when cutbacks are occurring within the general population, when prices start to drop and product markdowns start to increase. This is a part of the self-correction mechanism that can start to slow the inflationary environment within an economy. Some companies might reduce locations, reduce inventory or cut staff. If the inflation is persistent, more companies will undertake more drastic measures such as filing for bankruptcy or just close entirely.

Food banks will see more clientele and the evening news will soon fill up with stories about how hard it is to make ends meet. The housing market will likely slow and the calls for the government to “do something” will increase.

The human factor will become more painful to watch and retirement plans like pensions and the like will suffer.

The grand shrinking of the economy will become more and more prevalent and widely acknowledged in the evening news. All of these mechanisms will reduce consumer demand and inflation will slow.

The extent of the economic contraction will depend on how much inflationary damage has preceded the slowdown, with that damage being the inflationary economic events that preceded it.

The question becomes how much damage is inflicted on the consumer before demand drops to the point of recession or even a deeper economic contraction.

It remains to be seen how many people will be affected and how severely, but if inflation stays persistent and stubbornly unyielding, the damage will be ongoing and difficult to measure, let alone forecast.

“Watching the markets so you don’t have to”

(end)    

(As mentioned, please use the below disclaimer exactly) THANKS   (Regulations)   This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249 His insurance agency is BAP INC. insurance services.  Email: news@moneymanagementradio.com.

 

 

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You Can Do it update 6 10 2026

 

Work hard, complain less, get up early and watch things get a little bit easier?

 

For literally decades, people have asked me how they can make more money. The answer is pretty easy. It may not be palatable to some, but there is a methodology to making more money than most.

When I was growing up, most fathers taught their kids to “work hard, get up early and be an honest and forthright person (whatever that is), and you’ll die rich”.

Well, that last part wasn’t too encouraging but that’s exactly what my dad told me.

Most people I grew up with did work hard and get up early and most of my high school friends now are doing just fine.  Those that are still alive that is.

Growing up in the 60’s and completing high school and college in the 70’s, it was really that simple. Get up early, work hard and the jobs were out there and the money would come.

Not so come the following decades. Government overspending started the buying power erosion of the once mighty U.S. dollar. This subsequently resulted in decades of inflation leading up to this very day. Inflation is the thief of affordability and is the silent killer to one’s financial security.

I am not going into the weeds of the whys and how of inflation but just know overspending governments print up paper dollars at will to accomplish that spending and that leads to inflation. Inflation eats away at your finances because wages never go up at the same rate as inflation does so it’s a race you slowly lose.

That said, although the effect of inflation is worse now than it was a few decades ago (because it’s gone on so long), today it IS easier to make a buck than it was 25 years ago or so.

Explaining that was eloquently done by a guy named David Goggins. He holds the world pull up record, passed both Navy Seal and Army Ranger training, and is the epitome of one hard working SOB (Look him up).

Goggins says it’s easy to be successful nowadays because most people have lost the work ethic or worse, are downright indolent.

Goggins says the examples of both types of people are everywhere we look.

In fact, I, myself, come across both types almost every single day.

For example, I ran across a 17-year-old high school student looking for yard work. I contacted him and instead of a 9:00 am start, he told me he starts at 7:00 am. Upon my inquiry, he mentioned he hits the gym at 5:00 am so he is up early and works all day.

I am like “wow”, what a breath of fresh air this kid is.”

Some motivational speakers say, “Tell me your daily schedule/plans, and I’ll tell you if you are going to be rich.”

I already know this 17-year-old kid will not be anyone society will have to worry about and he will probably be very well off in a few decades.

I know a handful of friends that get up at 5:00 am, work a solid 8-10 hours a day and live a full and active life. Not one of them are struggling. Or at least not like most.

This breed of people runs the restaurants that are always packed, the stores that are always busy and are the service folks that are dependable and do a darn good job. They’re the people we say “wow, that person does great work, always responds, fixes problems and doesn’t procrastinate”.

They are the people that put their heads down and keep swimming. They don’t quit, they keep fighting and it shows in most everything they do. Whatever the service, wherever they work, they just keep pushing.

And then there’s the other side of the spectrum where the majority lie says Goggins. “These folks are the ones making it easy for the rest of us.”

I won’t say what these folks do because it’s more like what they don’t do.

They don’t respond, they pay little attention to detail and simply don’t give it their all.

It’s not rocket science. It’s not what you do, but how you do it.

In conclusion, my gardener is only 17, and he’s just pulling weeds. But he’s damn good at it. He works hard and long and knows the secret that so many seem to not understand.

I have no doubt that with that kind of work ethic, he will go a long way.

It’s not always fun. It’s not always easy. But neither is the world today in which we live in.

Swim a little faster, work a little harder, get up a little earlier and complain a little bit less, and watch how your world will start to seem just a little bit easier.

“Watching the markets so you don’t have to”

 

 

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Know your annuity Update May 24 2026

Is there money in annuities?

 

 

Years ago, on more than a few Money Matters radio shows, I covered annuities with a bit of disdain and with good reason. In my opinion, the annuity universe was like the wild west, and frankly, I was no fan.

Back then, I found them confusing and as a financial analyst and stock market participant for decades, I never advocate putting money into anything confusing.

I have always said, “Your money should be regarded like your child. Always know where they are and what they’re doing, or some not-so-good things may occur.

Kind of an odd comparison and knowing where your money is might not be as important as knowing where your children are, but damn near.

As a financial analyst, I believed back then, and still do, knowing at least something about what one is invested in is wise advice.

I used to attend sales presentations from annuity companies and would sit in these meetings looking at all the different strategies offered and frankly scratch my head at almost all of them.

I don’t know. Maybe it was me, but most were so complicated as to how they worked, I would throw my hands up and walk out thinking if I, not a complete neanderthal about all things money, couldn’t understand how these investments worked, there was no way I would recommend one.

Graduating way back in 1979 with a degree in economics with honors and having been investing in the market since literally age 13 (with the help of my dad), I know a thing or two about financial matters. Complicated investments are just not for me nor anyone I might advise.

Fast forward to today, and although many annuities I still find way too complicated, I have found a handful that fulfills some niches and are simple enough for even the novice investor to understand.

Some triggered annuities can be easy to understand as well as what I call participation annuities. Triggered annuities may promise a fixed rate of return if the underlying index moves up but may offer a no-downside protection feature. Participation annuities center around offering a split of some percentage of a stock market increase, but like a triggered annuity, may have a no-downside clause.

I view these types of annuities as simple to explain with paper and pen. My father used to tell me that visually illustrating something can cut right through to someone’s conceptualization of whatever it is you are trying to explain. Drawing it out on paper while explaining the terms and conditions usually provides an investor with a clearer understanding of how the investment works.

Investors often say they want to make some money but not lose any. Although it sounds silly, it’s a valid petition to offer up such a desire.

After all, a bank savings account or CD offers such a feature. You won’t lose any money, but being FDIC insured and all, the investor will still make some money, right?

An annuity might have such a feature but may offer a better return than the current bank rate, which is why someone might invest in an annuity.

The bottom line is that annuities may have had a bad name at some point and no doubt; there are many annuities I still wouldn’t touch with the proverbial ten-foot pole.

But for investors who just can’t stomach any losses whatsoever, and there are many of them, a well-structured annuity with a simple strategy that almost anyone can understand might be just the right fit.

Keep in mind, annuities are not FDIC insured, and investors should read the prospectus in its entirety. That said, most advisors can and should sit down with anyone interested in an annuity and explain in full detail all the features, benefits and conditions that an annuity may have.

I will conclude today’s musing by saying if you don’t understand completely what is being presented, ask more questions. When in doubt, seek out a second opinion from a tax professional or perhaps even another advisor. And before making any annuity investment, although some insurance agents are allowed to sell annuities, in my opinion, also run it by an advisor at a reputable firm.

 This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249 His insurance agency is BAP INC. insurance services.  Email: news@moneymanagementradio.com.

 

 

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A Bubble in AI Stocks Again? Update April 27 2026

 

AI STOCKS    

 

We're Gonna be Rich! 

 

 

 

 

The manic buying of stocks in companies in the hottest sectors tends to lean towards what analysts call a stock bubble. We have all heard about and perhaps participated in stocks like housing in the mid 2000’s, the dotcom craze or a myriad of sectors where stocks seem to only go up in price.

All of these hot sectors eventually cool off, and the focus moves on to something else. Some of these bubbles end suddenly with horrific crashes and some just kind of fade away as interest wanes.

It’s safe to say that the Artificial Intelligence (AI) stocks are the latest craze. I have written about these stocks a few times here on Money Matters. I brought the craze to light close to a year ago, and as the stocks went higher and higher, warned about a possible bubble forming.

A few months back, I penned that AI stocks were reaching into the realm of ridiculous as far as valuations were concerned. Simply put, prices kept rising at a blistering pace and when that happens, bad things can follow.

The stocks did pull back a few times and have suffered significant down days on occasion only to be followed by eyepopping gains again.

More recently, a painful erosion in these stocks gave some investors the idea that the party was over and to get while the getting was good. It’s easy to see the ongoing pullback on some of the price charts of these securities. The original peak in prices occurred twice. The first peak hit its mark in late October and early November 2025, with a close rebound occurring around the start of February 2026. This February peak was followed by a notable haircut of prices of many of these AI stocks which lasted about seven weeks.

Starting in the beginning of April however, the party restarted, and what looked like a funeral in AI, turned into another rip-roaring rally. The uptrend has continued right up to the day I penned this latest AI musing (Saturday, April 25).

Looking at the most recent April run, the increases witnessed are again bordering on ridiculous. Don’t get me wrong. The rally started when a handful of AI companies posted stellar earnings in their latest reports. The earnings started what I call the bowling ball effect, where action in one company knocks the prices of others in the space higher as well.

But the caveat here is that stock prices are based on many metrics. One of these metrics being expected future earnings. When we look at the stock price, however, the price of the stock, compared to what these companies are expected to earn, it just doesn’t compute. At least in the metric that many analysts use to determine whether a stock is a good buy or not.

Without getting too technical, the price you pay for a stock is thought to be based on what the company will make and return to stockholders. This return will either be in cash or stock price appreciation. But there are reasonable return expectations and then there are ludicrous return expectations.

Summing it all up, whereas stock prices would normally be based on what a company will earn, when stock prices go so high where it would near be impossible to earn what would justify its stock price under normal circumstances, the stock price is just driven higher by the “next fool” theory.

Put simply, people buy the stock for no other reason than the assumption that someone else will pay more for stock later and therein will lie the profit.

Doing this is not investing. It’s speculative gambling.

And if I ever desire to do that, I will sit at a slot machine in Vegas and get a free drink to boot.

Like a slot machine, no doubt, some people will indeed make money at it. But for my retirement funds, I usually prefer to use a more traditional methodology.

“ This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249 His insurance agency is BAP INC. insurance services.  Email: news@moneymanagementradio.com.

 

 

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THOSE SKYROCKETING ENERGY BILLS UPDATE APRIL 19 2026

"DAMN, ENERGY COSTS SO MUCH, WHAT AM I TO DO?' 

 

 

 

With the cost of powering one’s home going up and up and away, I often query others I may know or run across about how much their power bills are. I find different answers from different people, but it seems like there is little rhyme or reason as to the swings in costs that are mentioned. Some are like me and have power bills in the many hundreds. We’re talking $600 or more a month in the worst months which hover around the first of the year. Our situation has the kids’ home during the holidays; the weather is cold and the small solar array I have generates little power. The combination of the three pushes me into the higher tiers as the more power you use, the higher that power cost. Sort of like the income tax structure where you pay more and more as you make more income. The kids use space heaters like lizards, stay up at night and watch TV, cook and whatever else they do. The forced air heater which heats the whole house runs constantly being winter and all. I scream like hell at both the wife and the kids that the power bill is huge and to shut down some stuff and put on a sweater, but it doesn’t work for long. What I find odd is some people I ask complain about their power bills doubling yet they still only pay something like a hundred bucks or so. I’m like “WHA”? It’s not surprising those out of state pay much smaller power bills. I travel a lot, so I ask a lot of folks the energy bill question, and it’s usually that way. If you are not in California, you don’t think about power bills so much. I have never done a survey so I may be all wet about the California thing, but it certainly seems that way. In any case, I do run into a lot of people here in California who still have puny power bills and I just shake my head. How come I have to make war with my family just to keep my power bills under $800 bucks or so while a friend across town pays a few hundred bucks if that? I call the power folks every so often and they tell me its zoning or something like that and it would take an act of Congress or God himself to get my rates lowered. Adding insult to injury, I have to use propane and well water as I am out in the country and not in city limits as are many. So now add in the propane bill which isn’t cheap. Then add in the cost of maintaining the water well and powering it and you have a giant chunk of your paycheck disappearing down the power-rat hole. I know we like to blame the power company. Oddly enough nobody seems to blame the propane company. But they a very close to one and the same, power and propane, so we probably should. All those power plants use gas, propane, liquid fuel and some even burn wood chips and other stuff. And everything the power plants use to make power keeps going up in price with all that other “stuff”. Sun and wind power help but they are not very efficient when you consider the cost to build, run, maintain and eventually dispose of the machinery at life’s end. The bottom line is everything is skyrocketing in price. And this power thing takes up a bigger chunk of my income. I think the fact that power is a necessity is a bit more irritating. It’s not like I am complaining about buying a boat, new car or fancy clothes that cost too much. It’s about staying warm, or cool, or fed, or watered. And that’s the part that bugs me. I know there are no easy solutions, and I don’t offer any here today except to say, we have to get a handle on the rising costs of all things. And water, power and heat are probably the most important reasons to do so. That and putting food on the table. The remedy to that will be offered up next week. Be sure not to miss it.

 

“Watching the markets so you don’t have to” (end) (As mentioned, please use the below disclaimer exactly) THANKS (Regulations) This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249 His insurance agency is BAP INC. insurance services. Email: news@moneymanagementradio.com.

 

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