The U.S. Bureau of Labor Statistics released its September Inflation report on Wednesday October 10th showing Annual Inflation was down from 2.5% in August to 2.4% in September. (But since we calculate it to two digits, it was actually 2.53% in August and 2.44% in September.) On a non-seasonally adjusted basis, monthly inflation in August was 0.08% and it increased to 0.16% in September but that was still lower than last September's 0.25% so the annual inflation rate fell. Gold Prices: As you can see on the above hourly chart, Gold peaked just over $2680, late last month, shortly after we published the chart below saying that, "On an inflation-adjusted basis gold is near … [Read more...]
FED Interest Rates
The Fed funds rate is, effectively, the price of money. When it changes, much like dropping a rock into the water, the impact ripples out in all directions.— Greg McBride, Bankrate Chief Financial Analyst On Wednesday, September 18th, the FED reduced interest rates for the first time in four years. Mr. Market has been anticipating this cut all year and it finally happened. Last month FED Chairman Powell hinted at a rate cut at this FOMC meeting and at the time most experts believed that the cut would only be 25 basis points or ¼%. But, once lower-than-expected August inflation numbers were released on September 11th, the market began clamoring for a 50 basis point cut, or even a 75 basis … [Read more...]
July 2024 Annual Inflation Falls Again
The U.S. Bureau of Labor Statistics released its July Inflation report on Wednesday August 14th showing Annual Inflation was down from 3% in June to 2.9%. (But since we calculate it to two digits, it was actually 2.97% in June and 2.89% in July.) On a non-seasonally adjusted basis, monthly inflation in June was 0.03% and 0.12% in July. So despite monthly inflation being slightly higher in July 2024 than in June, it was lower than July 2023 (@0.19%) so Annual Inflation fell. Economists had been predicting that the inflation rate would come in at 3.0% so inflation was lower than expectations, but Mr. Market didn't celebrate much (only increasing about 1/2%) but the rally continued upward on … [Read more...]
Inflation Causes Inequality
By Lenart Wagemans Many claim the problem with fractional reserve banking is that it loans money into existence. It does, but under normal circumstances, the money created by commercial banks disappears when loans are repaid or defaulted on, which therefore doesn’t create a permanent inflation of the money supply. Government intervention, however, converts temporary money into permanent money through bailouts like the Troubled Asset Relief Program. They purchase loans that would have been defaulted on, preventing the evaporation of credit. When banks hold loans that are at risk of default, they face having to write them off, which would remove this part of the money supply. Bailouts turn … [Read more...]
Annual Inflation Falls Below 3%
The U.S. Bureau of Labor Statistics released its June Inflation report on July 11th showing Annual Inflation was down from 3.3% in May to 3% in June. (But since we calculate it to two digits, it was actually 3.27% in May and 2.97% in June.) On a non-seasonally adjusted basis, monthly inflation in June was 0.03%. The Cleveland FED had been predicting that the inflation rate would come in at 3.12% so inflation was considerably lower than expectations. Markets took this as a good sign hoping for rate cuts possibly in September and rallied. The biggest beneficiaries were small cap stocks which have been beaten down by higher interest rates. The FED has been hinting that they would … [Read more...]
How Social Security Tax and Inflation Affect Couples’ Retirement
Planning for retirement is an essential part of couples' financial management. As life expectancy increases and healthcare costs rise, ensuring that you have sufficient funds to maintain your lifestyle during retirement has become more critical than ever. Two major factors that can significantly impact retirement income are Social Security tax and inflation. Many people don't realize that Social Security income can be taxable, (which doesn't seem right since Social Security was a "tax" from your income to start with). Understanding how these elements affect your financial future can help you make more informed decisions and better prepare for the years ahead. What is Social Security … [Read more...]
April Inflation Sparks Market
The U.S. Bureau of Labor Statistics released its April Inflation report on May 15th showing Annual Inflation was down from 3.5% in March to 3.4% in April. (but since we calculate it to two digits, it was actually 3.48% in March and 3.36% in April.) The markets took this as a good sign and the NYSE rallied 157.68 points resulting in a 0.87% gain. The NASDAQ did even better gaining 231.21 points or 1.40%. Prior to the gain, our NASDAQ ROC was flashing a warning signal. But we did say that we needed to wait for confirmation before selling. Unadjusted monthly inflation was 0.65% in March which moderated sharply to "only" 0.39% in April. Typically inflation is highest in the first … [Read more...]
March Inflation Causes Market Concern
The U.S. Bureau of Labor Statistics CPI report released on April 10th, showed Annual Inflation was up from 3.2% in February to 3.5% in March. (but since we calculate it to two digits, it was actually 3.15% in February and 3.48% in March.) Monthly inflation was 0.62% in February and 0.65% in March. Typically inflation is highest in the first quarter of the year, so these numbers are a bit high but not that unusual. In March 2023 monthly inflation was 0.33%, so annual inflation jumped in 2024. Mr. Market didn't like the news because it drastically reduced the chances of a rate cut anytime soon. So, stocks fell on the release. The NYSE opened at 18,171.20 and that was the high for the … [Read more...]
February 2024 Inflation Up Slightly
According to the Bureau of Labor Statistics CPI report released on March 12th, Annual Inflation was up from 3.1% in January 3.2% in December. (but since we calculate it to two digits, it was actually 3.09% in January and 3.15% in February.) Monthly inflation was 0.54% in January and 0.62% in February. Typically inflation is highest in the first quarter of the year, so these numbers are not that unusual. In January 2023 monthly inflation was 0.80%, so annual inflation was lower in 2024 but monthly inflation was "only" 0.56% in February 2023 so annual inflation increased in 2024. The BLS's Seasonally Adjusted Monthly rate for January was 0.3%, and 0.4% in February. As you can see … [Read more...]
December Inflation Increases to 3.35%
According to the Bureau of Labor Statistics CPI report released on January 11th, Annual Inflation was up to 3.4% in December from 3.1% in November. (but since we calculate it to two digits, it was actually 3.35%.) Monthly inflation was -0.04% in October, -0.20% in November, and -0.10% in December, But inflation is almost always low to negative in the fourth quarter of the year, so these numbers are not unusual. The BLS's Seasonally adjusted monthly rate for December was actually a positive 0.30% indicating that even though unadjusted was negative, it was not as negative as usual (making the adjusted numbers higher). The stock market was expecting another decline in inflation like … [Read more...]
