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Why Slowing Inflation Reduction Is Not All Bad
- 2024/04/26
- 再生時間： 25 分
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Today, we pivot from previous discussions on bull markets to delve into the topic of inflation, especially given the recent slowing of progress according to CPI data. Ed kicks off the discussion by highlighting that although we desire a linear decrease in inflation to the FED's 2% target, achieving this without economic recession is challenging. He points out the current robust state of the U.S. economy, with low unemployment at 3.8% and a significant GDP growth of 3.4% in the last quarter of 2023. Despite this, the struggle for median wage earners against inflation is real, accentuated by higher credit card interest rates and limited savings.Ed elaborates that the current economic conditions, including strong job markets and investment returns, inherently slow down the fight against inflation. He argues that while this scenario isn't ideal for every worker, it is preferable to the alternative—a recession marked by higher unemployment and reduced consumption, which would rapidly decrease inflation but at a greater cost.Alex then provides further analysis of recent economic data, emphasizing the variability within CPI's year-over-year report showing a moderated inflation rate at 4.1% for 2023. He discusses specific sectors like food and energy, highlighting significant disparities such as a decrease in energy costs and specific increases in costs of household goods. Alex reassures that despite prolonged higher interest rates, the market and economic outlook remains stable, supported by sustained job openings and steady real estate prices.Overall, our discussion underscores the complex interplay between economic growth, inflation, and the Federal Reserve's policies. We conclude that a slower reduction in inflation paired with economic stability is currently more beneficial than the drastic alternative of entering a recession.NEW: Birch Run Financial on YouTube: https://youtube.com/@birchrunfinancial You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.Or visit them on the web at https://www.birchrunfinancial.com/Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536 Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. Stock Market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions. International investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. Investing in small cap stocks generally involves greater risks, and therefore, may not be appropriate for every investor. The prices of small company stocks may be subject to more volatility than those of large company stocks. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190. Any rating is not ...