Another week, another economic data point. The September CPI (consumer price index) data was released on Thursday showing that consumer prices rose by 0.4%, higher than the expectations of 0.3%. Consumers experienced a slightly faster-than-expected increase in the prices of various goods and services, placing inflation concerns back in the spotlight for policymakers. Shelter costs were the main culprit for the higher number, accounting for more than half of the rise in the monthly numbers. With the Fed scheduled to meet two more times before year-end, the stubbornly high numbers could cause more room for concern. While our financial markets keep taking this data in stride, the forward-looking indicators remain split on whether we will see another 0.25-point increase before year-end. The Fed’s target goal of 2% inflation remains elusive and doesn’t seem likely to happen any time soon. These “doubts” are bringing back the speculation of a mild recession in early 2024. All this means for now is that more uncertainty remains in the cards. Uncertainty can provide windows of opportunity, the proverbial rainbow within the storm!
We learned this week that the annual Social Security Cost of Living Adjustment (COLA) will be +3.2% in 2024. While this may not equal the current inflationary environment of around 3.7%, it is still a welcome relief for many. More than 71 million Americans rely on their Social Security payments, and the increase equates to about a $50/month increase on average. While this may not seem like a lot, for many this is a much-needed lifeline. Before you get too excited, however, the size of the 2024 premium for Medicare Part B has not yet been announced. Medicare trustees have projected that the average monthly premium may be about $10 higher than 2023. According to the Social Security administration’s 2023 fact sheet: “For Social Security beneficiaries aged 65 and older, 37% of men and 42% of women receive 50% or more of their income from Social Security.” While these annual COLA adjustments might seem small in the grand scheme of things, for many it is a significant boost to their wellbeing.
It's corporate earnings season once again, and today kicked things off. Several large financial institutions reported their third quarter results with JP Morgan, Citigroup, PNC, Wells Fargo, and Blackrock leading the way. JP Morgan topped analysts’ expectations for third-quarter profit and revenue as the bank generated more interest income than expected, while credit costs were lower than expected. Well respected CEO Jamie Diamond warned that “while American consumers and businesses were healthy, households were spending down cash balances and that tight labor markets and ‘extremely high government debt levels’ meant that interest rates may climb even further from here.” Citigroup followed up and also reported better than expected numbers as did Wells Fargo. It is too early to say that everything is “rosy,” but it does point out that, while painful in some ways, higher interest rates aren’t all bad news. Keep in mind that these are the very early stages of earnings releases, and we have a ways to go in determining how companies, and consumers for that matter, are navigating the current environment.
Lastly, I would like to mention that our thoughts and prayers are with those that are being impacted directly and indirectly from the events unfolding in Israel. We continue to live in uncertain times and reflecting on those we love and care about remains an ever-important exercise. Be well and have a nice weekend.
Christopher E. Wasson, CFP®
Mosaic Asset Partners, LLC
1122 Kenilworth Drive, Suite 310
Towson, MD 21204
410.821.0089 fax 410.821.5993
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The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.