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  • Writer's pictureDoug MacGray

Jess, Inflation, 65-Year-Olds, and Hip Flexors

February 19, 2024


WELCOME JESS!:  We are thrilled to welcome Jessica Chominski to our team as our newest Financial Advisor! With a diverse background spanning from case management to teaching in both non-profit and institutional settings, Jessica brings a wealth of experience to the table. But that's not all—she's also a dedicated veteran, currently serving in the reserves, and a proud mother of six! Jessica will be working directly with our clients, providing expert guidance to individuals, families, and institutions alike. Her unique blend of skills, dedication, and passion for helping others make her an invaluable addition to our team. Please join us in giving Jessica a warm welcome!



INFLATION DECREASES, BUT LESS THAN EXPECTED: The steady decline in inflation continued in January. The Consumer Price Index rose 0.3%, and the annual figure came in at 3.1%. Remember that in December that figure was 3.4%, so that is good. However, many were predicting this would be lower and therefore the reaction was negative. The measurement that the Fed watches more closely, so-called "core" inflation that does not include food or energy, rose 0.4%, and the annual rise was 3.9%, the same as a month ago. Both numbers were above expectations. The big culprit seemed to be shelter costs which rose 0.6% in January. Investors in U.S. stocks did not like the news as evidenced by the immediate dip in major stock indices. The worry, of course, is that lowering inflation from over 6% (beginning of 2023) to nearly 3% (end of 2023) was easy, but getting from 3% to 2% might be a long, slow slog.


DISAPPOINTING RETAIL SALES IN JANUARY:  Retail sales were down 0.8% in January from the previous month and 0.6% higher than one year ago. Markets took the news in stride because of the belief that, despite trying to seasonally adjust, January is hard to calculate due to it coming on the heels of holiday shopping, and that weather may have been a factor. Sales at building materials and lawn and garden stores fell 4.1%, but sales at food services and drinking establishments rose 0.7%. So the cold weather influenced people to veer away from Lowes and head to the local pub in January.


U.S. STOCK RALLY PAUSES WHILE ASSESSING INFLATION DATA:  U.S. stock investors did not like the January inflation data reports. U.S. stocks suffered on Tuesday, and then inched back little by little for the rest of the week. The NASDAQ Composite was down 1.34% for the week, and smaller company stocks, as represented by the Russell 2000 index, were up 1.13%.  International stocks were also up. It seems like this was a week for the market leaders to pause and let others catch up. Fourth quarter corporate earnings reports last week (we now have 80% reporting) were mixed.  



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



A PROBLEM WITH DEFLATION:  While the entire world seems to be fighting inflation, China is suffering from deflation. In January, consumer prices were 0.8% lower than a year earlier. Producer prices fell every month last year, and are down 2.5% from a year earlier. The price of pork is down 17.3% year-over-year.  


HERE COME THE 65-YEAR-OLDS!:  Approximately 4.1 million Americans will turn 65 this year. That number is projected to stay at or near 4.1 million for five more years before decreasing. That's a lot of old people! In 2023, about 20% of Americans 65 and older were employed, which is about double what it was 35 years ago. Adjusted for inflation, their pay has increased from an average of $13 per hour to $22 per hour in 2023. They are also wealthier. The median net worth of a 65 to 74-year-old is currently $410,000. Adjusted for inflation, it was $282,270 in 2010. 


HERE COME THE AFFLUENT INDIANS:!  According to research by Goldman Sachs, the economy of India should grow by more than 6% every year through at least 2028. While that is happening, Indians with the ability to consume (and thus drive the economy) will also increase from about 60 million to 100 million. Goldman Sachs defined these people as those who 1) take a flight at least once a year, 2) order food delivery at least once a month, 3) have an income tax return that indicates at least $12,040 in income, and 4) have a credit card. One key industry that will benefit is oil. Even figuring renewable energy into the equation, India's consumption of oil will not peak anytime soon. When combined with other developing countries, this will continue to drive global oil consumption to higher and higher peaks for years to come.


DO YOU WANT TO READ MORE?:  Here are some tips from an article I just read by John Coleman:

  • Read for Fun - Get back into the habit of reading by finding something you will actually look forward to. Once you make reading more of a habit, it will get easier to read more challenging books.

  • Listen to Books - I have found that some classical books I want to read are easier to listen to than to sit down and read. It's not cheating. Listen while you work out (you are working out, right?). But don't rely exclusively on listening. In depth processing is harder.

  • Read with Others - Join or create book club. Accountability helps, and it also helps because you learn a lot more about what you are reading when you hear other people reacting to it.

  • Set Annual Goals - I have a goal of 26 books read in 2024. I am up to four. I have a white board in my office where I list the books right below the number "26."  

  • Commit to a Daily Habit - You can't do it if you don't make a time in your daily schedule that will accommodate the reading. Thirty minutes a day will get you to 15-20 books in a year.

  • Eliminate Distraction - This is why physical books are still better. You can remove the distractions of your electronic devices.

  • Let people know what you are reading - By doing this you can start interesting conversations and encourage others. Someone just came up to me last week and thanked me for mentioning that I had read Mark Twain's Joan of Arc. He decided to pick up a copy and we had a great conversation about the book. On that theme, I am currently rereading The Easter Enigma, by John Wenham (something I often do this time of year) and Infectious Generosity by Chris Anderson (recently recommended to me). On deck is East to the Dawn, a biography of Amelia Earhart (it is looking like they will soon find her downed plane!).



I DIDN'T EVEN KNOW I HAD A HIP FLEXOR:  I know precious little about anatomy, until something stops working. I went to see my doctor because I was experiencing pain after longer runs. "I think it is your hip flexor, you need physical therapy." Ugh. So now I am doing all these stretching, balancing and strengthening exercises with big rubber bands. Why am I telling you? Accountability of course. I have a hard time to sticking with this kind of regime. Now I will be embarrassed if I don't.  


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


"Cooperation is what allowed us to create civilization.  Generosity is therefore core to all that humanity has built, and to what we might yet build in the future."  Chris Anderson, Infectious Generosity


"A generous man will prosper; he who refreshes others will himself be refreshed."  Proverbs 11:25 (NIV)


SOURCES:

INFLATION DECREASES, BUT LESS THAN EXPECTED: https://www.bls.gov/news.release/cpi.nr0.htm

DISAPPOINTING RETAIL SALES IN JANUARY: https://www.census.gov/retail/sales.html


(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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