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  • Writer's pictureDoug MacGray
    • Mar 18
    • 4 min read

Inflation, St. Patrick, Guinness and a Shrub That Didn't Survive

March 18, 2024


PESKY INFLATION:  The Consumer Price Index rose 0.4% in February, growing by 3.2% over the past twelve months. The twelve month number was 3.1% a month ago. Core CPI, which is closely watched by the Fed, also rose 0.4% and was up by 3.8% over the last twelve months. Core CPI's 12-month number was 3.9% last month (and the month before) following a long-term pattern of very slow, gradual, but consistent decrease. Energy costs were up 2.3% for the month which had a big effect on the CPI number. Meanwhile, the Producer Price Index, which measures wholesale prices, rose 0.6% in February. 


INVESTORS ARE NOT FANS OF INFLATION:  The inflation numbers were not horrible, but they were poor enough to influence investors to pull back a little for the second straight week. These numbers make it unlikely that the Fed will lower rates any earlier than the June meeting that many have been predicting. The FedWatch Tool maintained by CME lowered its prediction of a May Fed rate cut from a 24% chance to a 9% chance.



LONGER-TERM PERFORMANCE:  Below are the annualized three-year and five-year numbers for these same indices.  



CONSUMER CONFIDENCE WANES A BIT:  The University of Michigan maintains a consumer confidence survey. According to that survey, overall confidence slipped in its latest reading last week from 76.9 to 76.5. 


RETAIL SALES ARE UP:  Despite a slight drop in confidence, consumers picked up spending. Retail sales were up 0.6% in February and were 1.5% higher than one year ago. This comes after retail sales dropped 1.1% last month (I had reported 0.8%, but the U.S. Census Bureau changed its report from last month.).



401(k) ACCOUNTS BEING USED TO COVER LIQUIDITY NEEDS:  In 2022, the average 401(k) balance fell by about 20%. Those same account balances rose by an average of 19% in 2023. These retirement plans were designed to keep American's nest eggs out of reach until later in life. The law does allow for emergency distributions, and such distributions have been increasing for four straight years, hitting back-to-back record highs in the past two years. The so-called hardship withdrawals, if done properly, allows the participant to avoid paying the 10% penalty. Nearly 40% of the hardship withdrawals in 2023 were taken to avoid foreclosure, up from 36% in 2022. More than 75% of the withdrawals were for $5,000 or less. In your own planning, while you should  feed your 401(k) generously, do not neglect your cash reserve fund and savings in more liquid accounts so that you can protect your 401(k) in times of adversity.


GROWTH IN NUCLEAR ENERGY:  Nuclear energy is likely to gain more steam as at least part of the answer to the demand for more carbon-neutral energy sources. China has a need for much more energy capacity. It has been building lots of coal-fired plants, but it is also building up its nuclear capacity. In the past decade, China has added 37 nuclear reactors, up to a total of 55 which puts them well ahead of France. They are still behind the U.S. which has 93, but only added two in the last decade. The average cost to put in a new power plant in the U.S. since 2000 has been about $13 billion, whereas the average cost in China has been $3.1 billion.


GUINESS WAS CREATED TO REDUCE ALCOHOL CONSUMPTION:  You read that correctly. Back in Arthur Guinness's day, drinking water was not safe. Alcohol was a safer alternative, but the most prevalent drink was cheap gin, which caused rampant drunkenness and alcoholism. So Arthur Guinness, a devout Christian, formulated his recipe for Guinness and began mass producing it to reduce alcohol consumption and provide jobs to the community. With the success of the brewery, he also became a prolific philanthropist. If you imbibe a Guinness this holiday, thank Arthur! But stay away from the Baily's and the Jameson. I don't think that was part of Arthur Guinness's vision. Slainté!


SPRING HAS SPRUNG!: We are experiencing wonderful weather this weekend, the last official weekend of winter. It seemed like blossoms were coming out, and things were greening everywhere you looked. But, it was a rough winter, and not everything survived. I just noticed this guy in our front yard that did not survive the winter. Oh well, a trip to the home center for a replacement.



Have a great week!


Our mission is to help you see the objective, find the path, and navigate past the obstacles to a more prosperous future.


Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax

(610) 628 4545


"I look at people and I just want to say, 'Why are you here? What is the purpose? There's a purpose in your life. What do you do to make things better?' Because that's the way I think. If I don't have a purpose today, I'll create one." Paul Alexander, (1946-2024), the man who spent 70 years in an iron lung and passed away last week


"Those who work their land will have abundant food, but those who chase fantasies will have their fill of poverty." Proverbs 28:19 (NIV)


SOURCES:

GUINESS WAS CREATED TO REDUCE ALCOHOL CONSUMPTION: God and Guinness, by Stephen Mansfield, 2009.


(c) 2024 A.D., Stonecrop Wealth Advisors, LLC, All Rights Reserved


*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets.

*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.

*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.


Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.

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