Market Update | February 13, 2023

Inflation has been cooling since the middle part of 2022 according to the U.S. Bureau of Labor Statistics’ Consumer Price Index (CPI) and Producer Price Index (PPI) numbers. The CPI and PPI December readings of 6.5% and 6.2%, respectively, are happily lower than their peaks last year at 9.1% and 11.7%. However, this is still uncomfortable compared to the 1.5-2.5% CPI range of pre-Covid times.

The Federal Reserve is watching the inflation data closely, as they are the jobs reports and other economic indicators. Last Tuesday, investors were eager to hear Fed Chair Jerome Powell’s first comments following the strong employment report the previous Friday. The concern was that the surprise job number would change Powell’s outlook coming out of the last Fed meeting.

Powell instead repeated his prior remarks, which were that a disinflationary trend was underway, and there remained a distance to travel before the measures taken tamed inflation. Powell also pointed out that the robust job growth showed why it might take so long to reduce inflation to the Fed’s target level.

It seems like we’re still in the middle of this journey of whiplash inflation. Although inflation has fallen in recent months, it has not fallen enough to satisfy the Fed – or Americans in general. Our team at BCS Wealth Management will continue to provide financial guidance according to the current economic landscape and what we believe is in your best interest.

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