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Perspectives

Battle Against Inflation Far From Over

by Fortem Financial February 24, 2025

We don’t want to over-emphasize the importance of one data point, but the data over the last several months suggest that the progress toward the Fed’s much-vaunted goal of 2% inflation has slowed. In truth, the 2% target is a widely agreed-upon fiction among both policymakers and market participants themselves borne out of a New Zealand central bank paper from the late 1980s.

Ironically, the target was only invoked when inflation was serially below 2% in the aftermath of the GFC. Since the 1950s, the average level of CPI has been 3.5%. A combination of deficits, deglobalization, decarbonization, historical precedent, and pent-up demand for wages would suggest that a second wave of inflation is a distinct possibility.

Our Common Man CPI of goods and services consumers must buy rather than those they might want to buy clocked in at 3.4% yesterday, exceeding the headline number of 3%. This is the 43rd time in the last 48 months the measure exceeded the official measure and may be one of the reasons the American people have felt grumpy about the economy despite low unemployment, a decline in the rate of inflation, and robust capital markets.

We believe it is important to note that everyday people look at the cumulative level of prices rather than the year-over-year change. This is one of the reasons recent wage negotiations have led to seemingly outsized concessions to labor (32% to Boeing machinists over four years, 62% over six years to the ILA.)

The five-year moving average of the CPI is still rising.

 

U.S. CPI Urban Consumers (Year-Over-Year Percent Change)

Prices on Essentials Increase Over Last Four Years vs. Wages

Wages Exceed Prices In the Prior Four Years

Source: Strategas

 

Market and Index Changes for the Week Ending 2/21/2025

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments. Data provided by Refinitiv.

 

 

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Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017, 2018 Five Star Wealth Managers!

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Five Star Professional Disclosure:
The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided. Additional information about this award is available at: fivestarprofessional.com/2016FiveStarWealthManagerMethodology.pdf
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