Mark Hauser, a private equity investor with extensive experience in strategic mergers and acquisitions, is a managing partner at Hauser Private Equity. He discusses inflation’s impacts on the economy and consumers.

Mark Hauser notes that when inflation rises, people have to spend more on the same goods, reducing their disposable income. These declining incomes often accompany rising prices for commodities such as oil and gas, whose costs increase because of inflation. This causes a decline in net worth for many individuals and families.

Inflation has many economic impacts that can be seen in the stock market. Mark Hauser notes that stocks are always affected by short-term inflation rates because companies have to adjust to increases in wages and other costs. If inflation rises, companies may have a higher cost of doing business. In addition, inflation tends to cause exchanges between hyperinflation and no inflation.

If inflation is expected to be high for an extended period or if the Federal Reserve does not respond aggressively enough to counteract it, investors may consider investing in commodities rather than stocks because their prices are more stable. Their prices do not fluctuate as much as the overall economy and commodity costs.

Mark Hauser says that the Federal Reserve has an important role in the economy and should not raise interest rates too quickly. He states that when interest rates rise too quickly, the stock market can decline in a very short period. Raising interest rates too quickly can also destabilize a fragile economy by causing an increase in inflation, which is why the Federal Reserve pays close attention to the dynamics of inflation and economic growth.

To be sure that the Federal Reserve does not raise interest rates too quickly, Mark Hauser recommends not making any major changes in one’s investments and being prepared to change one’s investments when necessary.

Hauser says that the Federal Reserve can play an important role in helping the economy by keeping interest rates low. He allows that if inflation rises, it is difficult to predict how quickly a recession can be avoided if the Federal Reserve raises interest rates, creating more uncertainty for investors.