Last we, we talked about the relationship between inflation and the Producer Price Index. This week, we’ll dive into the Consumer Price Index report- which will provide some insight into what has gotten more expensive and what has gotten cheaper. Then, we have some great news from the healthcare realm.
Every year, PNC calculates the year-over-year cost of the items mentioned in the Christmas carol, The 12 Days of Christmas. It’s a fun exercise that compares the cost of various goods (e.g., birds and gold) and services (e.g., farm labor, dancers, and musicians) to the prior year. In 2022, the average cost of all the items on the list increased 10.5%.
What caught our eye is that the 10.5% increase doesn’t tell the whole story, just as the 7.1% U.S. inflation rate for the 12 months ended November 2022 doesn’t tell the whole story.
In 2022, the generous giver of carol’s good and services didn’t pay a penny more for calling birds, swans, and milkmaids, but paid 25% more for French hens and 39.1% more for gold rings.
So, let’s break down exactly what has become a bit more expensive or a bit cheaper. It turns out that produce, sports tickets, and rent have all seen increases in price. While health insurance, home heating, and used cars have experienced a decrease in prices. Home prices are also seeing a slight downturn.
We know that the increases in the federal funds rate are affecting home and car buyers, consumers who carry credit card balances, and students with federal student loans. On the other hand, savers are benefiting from higher interest rates. For example, the rate on money market accounts has increased from 0.07% on 12/20/21 to .38% as of 12/19/22. If you are seeking higher rates on your cash balances, give us a call! Right now, treasury bills are currently paying over 4% with short maturities.
The Federal Reserve Board has indicated that it “seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run.” Are its rate increases working? The U.S. Department of Agriculture predicts that food-at-home prices will only increase 2.5% to 3.5% in 2023. JP Morgan expects used car prices to drop 10% to 20% in 2023 and new cars 2.5% to 5% in 2023. The price of a regular gallon of gas is dropping, but we don’t know if that trend will continue.
Whatever is happening in the economy, there’s some very good news for everyone on the horizon: Moderna and Merck are doing groundbreaking work on a new cancer vaccine. The combination of a melanoma vaccine and a new immunotherapy treatment have had statistically significant success in phase two of the study. The research is soon to move into phase three, which is the largest and most expansive stage in a research study. This work could be a life changing–indeed, life-giving–development for millions of people all over the world. We’ll keep you posted as phase three develops.
That’s it for us this week! We hope everyone celebrating Christmas and Hanukkah this week is having a wonderful season, and we’ll be back in your inboxes next Friday.
How We Help
One of the ways we help our clients is by doing beneficiary checks. We review the beneficiaries listed on life insurance and retirement accounts. We also help our clients decide what are the best options when applying for their pensions. We find that without reminders, people forget to check and review their beneficiary choices, and we’re happy to help keep them on your radar. If you think it’s time to do a beneficiary review of your own, give us a call!
Advisory Services offered through Obsidian Personal Planning Solutions, LLC. Securities are offered through Triad Advisors, member FINRA/SIPC. Obsidian Personal Planning Solutions, LLC, and Obsidian Personal Planning Solutions, Inc, are not affiliated with Triad Advisors.