Inflation Worries Inflated?

Yep, we have plenty to worry about as we grind through another seemingly endless winter on the two-year anniversary of the pandemic (2/22/22). Russia has invaded Ukraine. The first of many interest rate hikes seems imminent. Tax rates are likely going up. COVID remains omnipresent. The long-running bull market is taking a breather to massage out some leg cramps as it officially enters “correction” territory.

At times like these my dad used to say: “Things are never as good or as bad as they seem.”  He had a very high stress job which often involved life-and-death situations. But he kept things even keel and rarely brought his worries home with him.

His point was this: Whenever you’re on a roll -- whether in business, sports, investing, gambling or even your romantic life -- there are “cracks in the foundation” you’re not seeing because you’re caught up in the euphoria of your winning streak. And when it seems like you can’t get a break, no matter which direction you turn, there are actually good things happening all around you, but you’re not seeing them as you wallow is pessimism or self-pity.

Lessons from the Super Bowl

Case in point: At least two recent Super Bowl winners (2017 Philadelphia Eagles and 2015 Denver Broncos) have been in painful rebuild mode ever since they hoisted the Lombardi Trophy. Did they just get cocky or lazy after becoming world champs? No. They were simply a team of over-achievers that came together for one magical season despite all the aging veterans hobbling through in the final years of their contracts. They defied the odds with a roster held together with duct tape and safety pins. It makes for great stories the media and call-in-shows, but doesn’t set the foundation for a dynasty.

Momentum myopia works the same way when you’re on the schneid. Take the markets. While the S&P 500 officially entered “correction” territory today, did you know the index is still up more than 98% from where it was at this time five years ago? That’s better than a 14% annual rate of return!

 

Take inflation. The Labor Department reported earlier this month that the consumer-price index (CPI) in January reached its highest level since February 1982, when compared with the same month a year ago. As The Wall Street Journal reported, “that put inflation above December’s 7% annual rate and well above the 1.8% annual rate for inflation in 2019 ahead of the pandemic.”

Not great news, but let’s remember we’re talking about an arbitrary 12-month period today (Jan 2021 – Jan 2022) and comparing it to an arbitrary 12-month period 40 years ago (Jan 1981 – Jan 1982). If you widen the parameters of your comparison, you’ll see the peaks and valleys are not nearly as steep.

While we’re seeing jaw-dropping year-over-year price increases for things like gasoline (+49.6%), used cars & trucks (+37.3%) and energy +29.3%), let’s remember we’re coming off the extraordinarily low pandemic era prices when nobody went anywhere or did much of anything.

Let’s go back to 2019, a full year before the pandemic. According to the U.S. Bureau of Labor Statistics, the CPI stood at 255.7. Today it stands at 281.9, including a substantial jump last month. If my math is correct, the CPI has risen just 10% over the tumultuous last three years, a compound annual rate of about 3.3%. Not much higher than the historical rate of inflation in the U.S.

Still not convinced? Take a look at gas prices, which everyone can relate to. Some of my earliest childhood memories are of around-the-block gas lines during the Arab oil embargo of the early 1980s. You may be old enough to remember it was the first time that gas prices first hit an un-American $1 a gallon (gasp!)

Today the price of gas has more than tripled to $3.44 a gallon according to U.S. Energy Information Administration stats. That seems pretty steep, but if you do the math, you’ll see it’s a compound annual growth rate of less than 3%. There’s that 3% number again -- the long-term historical rate of inflation. When it comes to gasoline, we just got spoiled by $2.10 a gallon during the depths of the pandemic (November 2022). Same goes for interest rates. Even if the Fed invokes four separate rates hikes in 2022, each hike is likely to be no more than 25 basis points. So if rates are a full 1% higher than they are today, the will still be extremely low by historical standards.

It may get tougher for those with huge credit card debt or variable rate mortgages they never should have qualified for in the first place, but I don’t think that’s the case for most of your clients.

I feel your pain

I know rent and housing costs keep spiraling upward. I just got whacked with a 25% increase for my office space. I was pissed when I first saw the new lease – especially with so much commercial space available. But my wife reminded how much nicer the building is than when I moved in a dozen years ago. And now the lease includes a fully renovated office, VOIP phone service, high speed internet, unlimited coffee and access to a stunning roof patio and a modern 24/7 gym right in the building. So even though I’m paying 70% more than I did a dozen years ago. Do the math: it’s an average annual increase of only 4.1% for much nicer digs. Don’t tell the building owner, but that makes writing the monthly rent check a little less painful.

Bottom line: let’s take the long-view here and not get spooked by the doom-and-gloom headlines.

Conclusion

Writer and humorist, Sam Ewing, once said: “Inflation is when you pay $15 for the $10 haircut you used to get for $5 when you had hair.” Perhaps, but eventually you get to an age in which you don’t need as many haircuts as you used to and or you stop caring what you look like on Zoom calls. So, in the long run everything evens out.

Don’t agree? Tell me why.

 

 

#inflation, #marketcorrection, #volatility

Zoom Fatigued? Go ‘Old School’ with Audio-Only Virtual Meetings

Guest Post: Tina Dietz

Much has been written about improving team connectivity and maintaining company culture in a remote working environment. The prevailing solution to increase team communication and productivity is having virtual meetings through Zoom, Slack, Skype, Google Meet and other video meeting platforms. Yet, we can all agree that “Zoom fatigue” is real and can undermine team cohesion and job performance. So, what do we do to enhance our team’s relationships, bolster company culture and lead our team well, even when we are working remotely? There’s a very simple, yet powerful answer: We listen!

Research shows that with audio-only communication, we develop better listening skills, become more attuned to our team’s needs, form deeper connections and establish a culture of verbal equity. In turn, this increases overall productivity and happiness, strengthens dedication to the organization and reduces stress levels.

A recent academic study suggested that audio-only communication improves team cohesion and productivity, whereas video communication can undermine group problem-solving and may contribute to verbal inequity (which is an unequal distribution of talking time for each person). This can lead to some people dominating the conversation and can result in an unintentional relational strain among team members, which will negatively impact effectiveness.

However, the study also showed that when audio-only communication is used, team communication is more evenly distributed, because members are not relying on visual cues that indicate that others are continuing to, or are about to, speak. This frees up people who are inhibited by the fear of interrupting to add to the conversation. The study also revealed that in audio-only meetings, members mirrored one another’s vocal tone and pitch much more than they did in video interactions. This vocal mirroring increased their connection and their ability to problem-solve. Furthermore, some people rated their peers as more likable and trustworthy in audio-only interactions.

In addition to increasing productivity and strengthening team connection, audio-only meetings help us understand our team members better. Auditory discernment is a powerful tool. Our ability to determine others’ emotions simply by hearing their voices is evident through our personal experience and has been proven in multiple studies.

We’ve all had the experience of knowing if a friend is talking to a coworker or a family member without even hearing the name of who they’re speaking to. In fact, in one study, participants were instructed to listen to an audio clip of someone asking the simple question, “How are you?” and try to determine whether they were talking to a platonic friend or to a romantic partner. Interestingly, participants had an accuracy rate of 60.2%. This implies audio-only meetings help us better understand our team because we are not distracted by the mixed signals that visual cues and vocal tone can potentially send. Therefore, over time, we can become more attuned to our team’s needs and know when it’s best to address issues, adjust our communication style or offer support.

Furthermore, through audio-only communication, leaders encourage active listening (intentional listening and emotionally-intelligent engagement) among the entire team. According to researchers from the University of Iceland, when supervisors actively listened to their employees, employees reported higher dedication and vigor. This correlated to an increase in reciprocal communication, more psychological safety throughout the organization and improved physical and mental health. Taken further, this indicates that when leaders establish an environment where everyone’s voice is heard and people engage in thoughtful participation, we create a climate where we can maximize strengths, address weaknesses and curb burnout. 

Audio allows you to be yourself

Finally, one of the most powerful ways audio-only meetings increase team relationships and performance is by reducing stress. On the technical side, audio-only meetings help mitigate issues due to a poor internet connection (we’ve all had our faces frozen in a contorted expression for everyone to see, haven’t we?). Additionally, it is human nature that we become more self-aware when we see ourselves on camera. Sometimes, we focus so much on what we look like that our attention is divided and we do not engage in the meeting as well as we could have. In audio-only meetings, no one has to worry about making sure we get the proper camera angle or the lighting is correct. It doesn’t matter if our hair isn’t done, our background is a mess or if our child runs into the room. Audio-only meetings allow everyone to be more relaxed, which leads to clearer thinking and higher productivity.

When we turn off the camera and adopt audio-only meetings, we can improve our team’s communication and efficiency, strengthen relationships, have a deeper understanding of others, better engage in active listening and reduce stress for ourselves and our colleagues.

So, what can we do to capitalize on these benefits, other than turning off the camera?

Be patient. The benefits will not happen overnight. At first, the conference call will be filled with interruptions. However, as your team learns one another’s rhythms, these interruptions should lessen.

Relax during the conversation. Because we are so used to “Zooming” into every meeting, we’ll initially stare at our computer or phone, as if we are on camera. Nevertheless, with each meeting, you and your team will relax, which will allow everyone to be more transparent with one another.

Intentionally listen during the call. Who else has accidentally zoned out during a phone call because they were free to do something else, like laundry? An easy way to ensure you are actively listening on team conference calls is by imagining that you are in a one-on-one conversation with whoever is speaking. This will help you be more attentive and gain insights into every member of your team.   

Ironically, audio is sometimes better equipped than video for the modern professional’s lifestyle. One client of mine is a top-notch salesperson who is constantly driving to client meetings. She finds it so much more efficient (and safer) to stay in touch with her team via conference call than Zoom when behind the wheel. Another colleague is a competitive triathlete who squeezes two daily workouts into his packed schedule. While he doesn’t try to have client meetings on the bike or in the pool, he does find himself frequently eating meals at his desk or dressed in workout attire. He finds audio significantly more efficient than video for staying in touch with clients and team members.

Conclusion

Remember: Turn off your camera, be patient, relax and focus on whoever is speaking. Try going “old school” with audio-only meetings where you can and implement these steps to give yourself and your team a new level of connection and the potential for higher productivity.

Tina Dietz is the CEO of Twin Flames Studios, an award-winning audio production company dedicated to transforming senior leaders and mature companies into global industry thought leaders.