CPI Up, Stocks Pause, Incomes Aren't Keeping Up, and Having Fun

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September 17, 2023

INFLATION RISES AGAIN, BUT…: The Consumer Price Index, the headline inflation statistic, rose by 0.6% in August after only a 0.2% increase in July. The 12-month increase rose to 3.7%, up from 3.2% last month. The largest contributor to the increase in August was gasoline. The Fed’s preferred measurement is the so-called “core” index which strips out food and energy (because they are too volatile). That index decreased to 4.35% from 4.65% the month before.

U.S. RETAIL SALES GROWTH: Retail sales in August were 0.6% higher than the prior month and 2.5% higher than August of 2022. The increase in spending was mostly fueled by increases in gasoline costs. Consumers did not cut back on driving despite the higher costs. If you remove increased spending at the pump, sales were up 0.2%

INDUSTRIAL PRODUCTION GROWS: In August, U.S. industrial production (mining, manufacturing, and utilities) rose by 0.4%. Manufacturing increased by 0.1% despite a slowdown in auto manufacturing output, something that is sure to continue with the auto worker disruptions now occurring.

TECH STOCKS LEAD TO ANOTHER NEGATIVE WEEK: Tech stocks struggled, causing a slightly negative outcome for the week. Adobe announced some disappointing earnings causing its share price to decline, and that led to contagion among many of the other big tech players. Stocks have been moving up and down over the past weeks, but staying in a tight range. That makes sense after rising for most of the year. Investors are now trying to figure out where the economy and the markets go from here.

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

EUROPEAN RATE HIKE: The European Central Bank’s deposit rate was negative last year. Last week the ECB raised that rate for the tenth consecutive time. That rate now stands at 4.0%. The most recent increase was the result of a split decision. The ECB indicated that it is probably done raising rates. The value of the euro tumbled on the news (Now at $1.07 U.S.).

AMERICANS’ REAL INCOME IS DECREASING: According to the Census Bureau, 2022 was the third straight year that Americans experienced a decline in household income. Americans’ inflation-adjusted median household income fell to $74,580 in 2022, declining 2.3% from 2021. This figure has dropped 4.7% since 2019. The trend has recently reversed. Since December, household income has risen faster than the rate of inflation. Let’s hope this trend continues.

NOT ENOUGH HOUSES FOR SALE: As you see from the graph below, the inventory of homes for sale has remained pretty flat all year. We now have less homes for sale than their were last year at this time, about 6.9% less. There are over 46% less homes available for sale now than in 2019. Year-to-date, inentory is up 3.7%.

ARE WE HAVING FUN YET?: I had the great good fortune to play a round of golf at a beautiful venue this past week. At one point, the food and drink cart came by, and we purchased some drinks. To strike up conversation with the young woman who served us, I asked, “Have you ever golfed here?” She said, “Well I have never played golf. I like tennis. People playing golf never seem to be having fun.” I made a point of having fun for the rest of the round.

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. ®
Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax
(610) 628 4545

“It’s hard to beat a person who never gives up.” George Herman “Babe” Ruth

“Make it your ambition to lead a quiet life: You should mind your own business and work with your hands.” I Thessalonians 4:11 (NIV)

EUROPEAN RATE HIKE: https://www.wsj.com/economy/central-banking/ecb-rate-decision-sept-19243b7e?mod=hp_major_pos1#cxrecs_s
INDUSTRIAL PRODUCTION GROWS: https://www.federalreserve.gov/releases/g17/Current/default.htm
U.S. RETAIL SALES GROWTH: https://www.census.gov/retail/sales.html
INFLATION RISES AGAIN, BUT.. https://www.bls.gov/news.release/cpi.nr0.htm
AMERICANS’ REAL INCOME IS DECREASING: https://www.wsj.com/economy/u-s-incomes-fall-for-third-straight-year-7b8293c6
NOT ENOUGH HOUSES FOR SALE: https://www.calculatedriskblog.com/2023/09/housing-september-11th-weekly-update.html

(c) 2023 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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    September 18, 2023


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