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Market Recap – January 15, 2024

Keel Point

January 15, 2024

The big economic news last week was that both headline and core CPI inflation were up 0.3% in December, with 12-month headline CPI rising to 3.4% and core CPI falling to 3.9%.  The Producer Price Index fell in December and was up only 1% in 2023. The S&P reacted positively and gained 1.7% last week.

  • Core CPI increased because of a 0.5% m/m increase in used vehicle prices, which more recent data indicate will be reversed. Likewise, a 0.4% increase in rent of shelter (44% of core CPI) was also a factor, which recent data indicate is slowing.
  • Based on the CPI and PPI data, it looks like core PCE prices increased by 0.17% m/m last month. That would imply the three-month annualized rate is at a two-year low of 1.5%. The six-month annualized rate is 1.9% — both below the Fed’s 2% target rate.

The U.S. economy fundamentally in good shape, but there is a growing disconnect between how consumers and investors view their economic and financial well-being. 

  • Inflation (rate of price increases) has slowed from 9.1% to a 2% run-rate.
  • Rents and home ownership price increases are slowing each month and look to be back down below 4% by mid-2024.
  • Unemployment is below 4%, and wages are rising faster than inflation.
  • Consumer spending was up 4% in Q3 and GDP growth looks to average 2.5% in 2023 and 1.5% in 2024.
  • And yet, consumers are feeling overwhelmed by higher prices, principally groceries which are up, on average, 25.5% since January 2000.

  • From an Axios/Harris December 2023 poll, 76% of respondents agree with this statement: “Economists may say things are getting better, but we’re not feeling it where I live.” 88% say “Gas, groceries and housing costs, not stocks, are the real economic indicators I care about.” More than half rated the national economy as weak.

 

 

Disclosure:  Securities offered through Keel Point Capital, LLC, Member FINRA and SPIC.  Brokerage and Investment Advisory Services are offered under the Keel Point brand. Investment Advisory Services offered by Keel Point, LLC, an affiliate of Keel Point Capital, LLC. While reasonable efforts have been made to provide data from sources considered to be reliable, no guarantee of accuracy is given. Keel Point does not give tax, accounting, regulatory, or legal advice to its clients.

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