The Week in Review: November 18, 2024
Inflation—Not Back to Target, Not Enough to Derail a December Rate Cut
The Consumer Price Index (CPI) rose 0.2% in October, according to the U.S. Bureau of Labor Statistics. The core CPI, which excludes food and energy, rose 0.3% last month. The CPI is up 2.6% compared to one year ago, and the core CPI is up 3.3%.
After reviewing the details, let’s examine the trends. As previously mentioned, the annual core rate was 3.3% in October, the same as it was five months ago.
First, let’s address a disconnect regarding inflation. Investors and the Federal Reserve are more focused on the inflation rate and its dramatic slowdown since peaking in 2022.
Everyday shoppers are relieved prices aren’t rising at 2022’s pace, but their primary focus has been on the current price level, which is much higher than pre-pandemic levels.
Figure 2 highlights the monthly change in the core CPI. The red line highlights the 4-month average, which helps smooth away the noise that can accompany the monthly numbers.
What do we see? The monthly figures for August—October 2024 are slightly higher than those from the same period in 2023, which might be concerning and worth monitoring. However, it’s important to note that the peaks and valleys in the 4-month average remain to the downside.
An interruption in that trend might be cause for alarm.
For now, it can be argued that the inflation rate remains in a gradual downward trend.
Today’s stickiness in inflation may be a catch-up of big price hikes in 2022 and 2023. For example, auto insurance soared, reflecting the earlier rise in car prices.
The data alone did not contain much that might discourage the Fed from reducing the Fed funds rate at its December meeting.
Yet, in a speech last Thursday in Dallas, Fed Chief Jay Powell said, “The economy is not sending any signals that we need to be in a hurry (my emphasis) to lower rates.”
He didn’t say, “The economy is not sending any signals that we need to… lower rates.” That would have slammed the door shut on a December rate cut.
However, he’s taking an aggressive path lower off the table amid upbeat economic growth.
Market Summary
Two for the Road
From January to September of 2024, there were 38.1 million televisions sold with a width of at least 97 inches, or just over 8 feet. The first 98-inch television from Samsung was introduced in 2019, priced at $99,000, and this year, it has four similar models starting at $4,000. - Numlock News, November 4, 2024
In 2005, the typical home seller in the U.S. was only 47 years old. Today, the typical home seller is 63, the oldest ever recorded. - MarketWatch, November 5, 2024
Please do not hesitate to contact me with any questions or concerns. I hope you have a wonderful week!
Bill Stordahl, CFP®
Managing Director
Stordahl Capital Management
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