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...]
October 2023 Inflation Shrinks
According to the Bureau of Labor Statistics CPI report released on November 14th, Annual Inflation was down to 3.2% in October. (but since we calculate it to two digits, it was actually down to 3.24%.) Monthly inflation was 0.44% in August, 0.25% in September, and -0.04% in October. So it certainly looks like inflation is falling. The stock market took this as a "positive surprise" and went on to rally. We had been projecting this decrease due to numerical anomalies for several months. Typically the 4th quarter has low or negative monthly numbers but October 2022 was very high thus the "surprise" as the new numbers were normal (i.e. much lower). Unfortunately, December holds the … [Read more...]
August 2023 Inflation Up Sharply
According to the Bureau of Labor Statistics CPI report released on September 13th, Annual Inflation increased from 3.2% in July to 3.7% in August. (but more precisely, it was from 3.18% to 3.67%.) Monthly inflation went from 0.19% in July to 0.44% in August. August 2023 Inflation Summary: Annual Inflation rose from 3.18% to 3.67% CPI Index rose from 305.691 to 307.026 Monthly Inflation for August was 0.44%, July was 0.19% and June was 0.32%. Next release October … [Read more...]
Can the FED Engineer a “Soft Landing”?
The ultimate dream of the Federal Reserve and those who believe in the FED's omniscience is for them to engineer a soft landing, i.e., curbing inflation without sending the economy into a deep recession. The idea is that if they raise rates just enough, but not too much, they can find the "Goldilocks" middle ground that will magically cool inflation just enough. In today's article, Mihai Macovei explains why that is more of a fairytale than Goldilocks herself. ~Tim McMahon, editor. There Is No Fed Magic Trick to Achieve a Soft Landing Economic growth in the United States accelerated to a 2.4 percent annualized rate in the second quarter of 2023, picking up from 2.0 percent in the first … [Read more...]
When Can We Expect Lower FED Rates?
Why Has The FED Been Raising Interest Rates? The Federal Reserve (Fed) started raising interest rates in March 2022 in an effort to combat inflation. As of the end of July 2023, the Fed's target rate limit is 5.5%, the highest level in 15 years. There are a few reasons why the Fed is raising interest rates so aggressively. First, inflation was at a 40-year high. In June 2022, the Consumer Price Index (CPI) rose 9.06% year-over-year, the fastest pace since December 1981. This means that the cost of goods and services was rising rapidly, which was eroding the purchasing power of consumers and businesses. Second, the economy is still strong. The unemployment rate posted a 50-year … [Read more...]
July Annual Inflation- Up Slightly
According to the Bureau of Labor Statistics CPI report released on August 10th, Annual Inflation increased from 3% in June to 3.2% in July. (but more precisely, it was from 2.97% to 3.18%.) Monthly inflation was 0.25% for May 2023, 0.32% in June, and 0.19% in July. July 2023 Inflation Summary: Annual Inflation rose from 2.97% to 3.18% CPI Index rose from 305.109 to 305.691 Monthly Inflation for July was 0.19%, down from 0.32% in June Next release is September … [Read more...]
