Good News On Inflation Boosts Stocks For Third Straight Week

Published Friday, November 17, 2023 at: 9:32 PM EST

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The post-pandemic inflation era appears to ending. While it was scary and threatened to wreck the economy, evidence of its passing is strong, and it is likely to be little more than a blip in American economic history.

The Federal stimulus legislation of 2020 and 2021 that followed the partial shutdown of the economy and oil price spike of 2022 were met with the most aggressive monetary policy in modern times. It worked.  The inflation scare of the early 2020s has been a lot less destructive than the major inflation spike of the 1970s and 1980s.

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From a nearly 8% annual rate in October 2022, the Consumer Price Index measure of inflation fell to 3.2%, the U.S. Bureau of Labor Statistics said Tuesday, November 14. Excluding volatile energy and food expenses, the “core” CPI dropped from more than 6% to about 3%.  

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The monthly rate of change in the CPI in October on an annualized basis was 0.5% — below the Federal Reserve’s 2% target rate. This is good news because the low inflation rate is occurring as the economy is projected to grow by about 2% in the fourth quarter, according to two independent algorithms created by the Federal Reserve Bank branches in Atlanta and New York City.  To be clear, the Federal Reserve’s 11 interest rate hikes since March 2022 has brought inflation under control without causing a recession.  

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For the third consecutive week, the stock market rose on good news about the economy.  The Standard & Poor’s 500 stock index closed Friday at 4514.02, up +0.13% from Thursday, a gain of +2.24% from a week ago. The index is up +101.75% from the March 23, 2020 bear market low and down -5.89% from its January 3, 2022, all-time high

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