Inflation Data Trends

The Markets

Inflation met expectations.

When the Bureau of Labor Statistics released the Consumer Price Index (CPI) last week, it showed that inflation was at levels last seen in 1982. In November, prices were up 0.8 percent month-to-month and 6.8 percent year-to-year.

“It was the blowout, inflation number that everyone was expecting—and it was met with a shrug,” reported Ben Levisohn of Barron’s. “The major indexes, for their part, rose a touch on Friday to finish what turned out to be a fantastic week

The financial markets’ tepid response to the CPI sparked debate about whether inflation has peaked.

No matter which side of the argument you come down on, “The surge in inflation since the start of 2021 means that it may remain elevated in annual terms for a while to come. A relatively optimistic forecast would have inflation returning to its pre-pandemic norm only at the very end of 2022,” reported The Economist.

SENTIMENT ROUND-UP…The University of Michigan’s Index of Consumer Sentiment showed an increase in optimism in early December – and it had nothing to do with the Michigan Wolverines winning the Big 10 Championship for the first time in 17 years!

When respondents were asked whether inflation or unemployment was a more serious problem in the United States, 76 percent chose inflation, 21 percent said unemployment, and the remainder couldn’t decide or thought both were problems.

As we wrap the year-end, I am picking up tax write-offs on down positions where possible and re-blending some of the accounts. This is important to realize because good tactical decisions can happen during weak market periods rather than just waiting for the market to rebound.

Focus On The Positive
“The only function of economic forecasting is to make astrology look respectable.”—John Kenneth Galbraith, economist