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How to Cope With Rising Rates and Inflation



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Important pieces of information arrived over the last few days, but they do nothing to clear away the fog blanketing the markets and the economy.Is the economy lurching into a recession? Is inflation coming under control?Clear answers are important for anyone who has a job or hopes to get one, anyone with bills to pay, a house to buy or sell, an apartment to rent, a loan to make or repay, or investments to worry about. Really, for just about everyone.But nobody has those answers.It would be better, obviously, if there were more clarity, but it simply does not exist. Prudent people will need operate on two tracks: preparing for short-term trouble, while investing for the long term.The backgroundFirst, on Wednesday, the Federal Reserve announced that it was increasing short-term interest rates by 0.75 percentage points, bringing the federal funds rate to the 2.25 to 2.50 percent range — a sharp rise from nearly zero at the beginning of March.Then, on Thursday, the Commerce Department announced that economic output, as measured by gross domestic product, fell in the second quarter at a seasonally adjusted annual rate of 0.9 percent. That was the second consecutive quarterly decline. The new data will be revised, and does not mean that the economy is in a recession, but even so, this re …

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