From 1960 – 2021 the average inflation rate was ~3.8%. I know The Fed has a “mandate” of 2%, But, as the saying goes “people in hell want ice water”. Inflation started going up in April of last year and seems to have peaked June of this year at 9.1%.
So, it took 15-16 months to get to its peak.
Does it not seem reasonable that it will take 15-16 months to come back down?
I know this probably seems a little too simplistic, but does it not stand to reason?
Although clearly the stock market does not feel that way.
As we start coming up on comparable inflation numbers from this year to 2023, I expect that we will see lower inflation numbers. Click here for details on historical inflation data.
In March of last year we had inflation of 2.6% and this year we had 8.5%, but all of the components that make up inflation are down from then.
Such as gasoline where in March of last year the average gallon of gas was $2.98 and in March of this year it was $4.3. Click here for details on historical gasoline prices.
That is a 44% increase.
If we go into March of 2023 with gas prices below $4.3, is that not going to show a decrease?
Here are some other examples:
- Oil It was in the $120’s in March of 2021 and is now in the $80’s,
- Lumber was in the $1400 and is now in the $400’s.
- Soybeans are down from the $1700’s to the $1300’s,
- Steel is down from ~$5200 to ~$3900.
My point is that most of these items were increasing all of last year and are no longer increasing.
So even if you look at them on a year over year basis TODAY, they are higher, but once we get into next year, the items are no longer increasing and in most cases they are lower, and inflation should be lower.
So if you want help with your portfolio and taking advantage of the market, from someone who will tailor a portfolio to your personal needs, give me a call.
Interested in reading more?
Click here to view our other blog posts!