Nothing Left To Fear (At Least Right Now)
🚀 The quick version: The economy at the moment resembles a scene of you just putting the kids to bed and sitting down with a glass of wine. Everything is calm and quiet (that is until you hear small footsteps or crying).
For the details:
Used cars, anyone? Finally we are starting to see signs that used car prices are softening. The Manheim Used Vehicle Value Index (MUVVI) for June registered one of its biggest monthly drops in the history of the index, falling 4.2% from May. We’re not back to pre-Covid prices yet, but maybe we are finally headed in the right direction.
Inflation is down to 3% . The Consumer Price Index (CPI) for June (what Wall Street deems the official inflation number) tells us inflation is now down to 3% from 4% in May and a peak of just over 9% in June 2022…Finally. It was also nice to see categories like meat & dairy, gas, and airline fares drive the downward trend this month.
Producers are paying less for stuff. The Producer Price Index (PPI) for June also showed downward trends coming in at almost a zero pricing change to last year vs. almost 1% in May. When they pay less, you wind up paying less.
Companies seem optimistic (so far). 18 of the companies in the S&P 500 reported earnings, and on the whole said things were not too shabby. Companies like Delta, Pepsi, and JP Morgan all said the consumer was on solid footing and they were hopeful the remainder of the year would be a strong environment (they did share some risks however - worth reading what JP Morgan CEO, Jamie Dimon, had to say here).
👪 How it affects your family: With inflation coming down and a strong economic backdrop likely (at least over the next few months), these are some quick wins you can take to position your family better today.
Put your savvy shopper hat on. With inflation coming down, pricing from companies is going to get more dynamic. They will be forced to compete more by lowering prices and having sales (vs. using inflation as an excuse to just hold prices high). Set price alerts for things your family needs, looks for deals (we will try to highlight some), and stay patient if possible especially on big purchases (plane tickets, cars, etc).
Invest (wisely) with spare funds. The economy and the stock market are two different things (one being good does not mean the other will automatically do well, and visa versa). But good news is that with inflation just at 3%, you don’t have to buy stocks to beat it. Don’t just let spare cash sit in your checking account, ask your bank about high yield savings accounts, or investigate other safe places for your money that can earn over 3% (our quick guide to safe vs. aggressive investments).
