The economy is cyclical, rotating through four distinct stages: expansion, peak, contraction, and trough. While it’s straightforward on paper, our financial system is much more challenging to decipher in reality. That’s because the economy isn’t tangible. You can’t step outside and feel the market’s temperature. And news outlets aren’t exactly known for unbiased, unemotional reporting — often, it’s quite the opposite. So, how can you gauge the health of the economy and, in turn, better inform your financial decisions? By using a mix of objective data and your personal perspective. How to Tell We’re in an Inflationary Economy Inflation refers to the rise in prices over time, typically compared to the previous year. Some inflation is normal — for instance, the Federal Reserve (the “Fed”) targets 2% annual inflation. This is considered a healthy rate that encourages spending, saving, and investment while avoiding the negative effects of high inflation or deflation. That said, inflation becomes a concern when prices rise considerably more than expected and impact the affordability of certain goods and services. You’d likely see signs of inflation in your daily life — your