June Inflation Highest Since February, CPI +2.7%

[disneysteve]

It's a tale of two worlds at the moment. Retail data basically says top earners are keeping things alive, and the bottom 80% are struggling. We're fine - as are most of the regulars here - but some of us realize that's probably not the reality for most people.

This is a big one that I don't see discussed nearly enough. Yes, retail sales are holding up well, but that's because the rich are still spending, offsetting decreased spending by everyone else. That's nice but it's probably not sustainable and gives a skewed view of how things are going.

Walmart reported a while ago that the biggest chunk of increased sales they've seen is from shoppers earning over 100K/year. That tells us two things. People of more average incomes are shopping less and people of higher incomes are being more price conscious. Neither of those are good signs for the economy.

[ua_guy]

I'll celebrate when there's something notable to celebrate.

Q3 inflation was 2.7% which is still up from the beginning of the year, and that's based on a flawed report because of the shutdown. It's very likely higher. As mentioned, unemployment is up and job growth has slowed. Economic stats aside, perception of how the economy is being handled is overwhelmingly negative.

The cure for lower prices is lower prices. It's starting with energy, and it will likely take some of the economy with it. But at least gas is slightly cheaper - we could lose 10% market value next year in stocks, but hey, at least we saved some chump change on gas, right?

Don't forget that farmers are being crippled and $12 Billion have gone into propping them up because of botched tariff policies. Egg prices were subsidized, billions put into that.

Blame the government for health insurance prices... OK... that's only one part of it. That rips into the budgets for people who continue to pay for it, and that affects the economy negatively.

It's a tale of two worlds at the moment. Retail data basically says top earners are keeping things alive, and the bottom 80% are struggling. We're fine - as are most of the regulars here - but some of us realize that's probably not the reality for most people.

[disneysteve]

Things look pretty good in this neck of the woods. Inflation much improved, fuel prices lower than they've been in a while, plenty of jobs available, area businesses are expanding, very few foreclosures in the area, lending rates have gone down a little, etc.

A lot of things are definitely regional but I'm talking about national stats.

The November unemployment rate was the highest in over 4 years.

Business bankruptcies through October were at the highest level since 2010 following the Great Recession.

The foreclosure rate jumped by double digits for 2025 compared to 2024.

Consumer debt hit a record high in 2025 topping $18.5 trillion.

But again, eggs are cheaper (which was almost entirely due to avian flu, not inflationary issues) and gas is lower (which is largely influenced by international conditions, not domestic ones) so everything is peachy keen.

[Fishindude77]

I don't know where you are looking. The economy is not doing well at all. Inflation is up. Unemployment is up. Corporate bankruptcies surged in 2025. Business closures are up. Health insurance is up sharply for 2026. But eggs are cheaper so everything must be okay.

You and I don't read / listen / watch or observe the same things or news.
Things look pretty good in this neck of the woods. Inflation much improved, fuel prices lower than they've been in a while, plenty of jobs available, area businesses are expanding, very few foreclosures in the area, lending rates have gone down a little, etc.

I blame the insurance increases on the federal government getting involved in a business they have no business in to start with.
Nearly everything they touch winds up a financial mess.

[disneysteve]

Things currently look pretty good, gasoline down, egg prices back to normal, etc. Seems like the economy is getting a whole lot better.

I don't know where you are looking. The economy is not doing well at all. Inflation is up. Unemployment is up. Corporate bankruptcies surged in 2025. Business closures are up. Health insurance is up sharply for 2026. But eggs are cheaper so everything must be okay.

[QuarterMillionMan]

Things currently look pretty good, gasoline down, egg prices back to normal, etc. Seems like the economy is getting a whole lot better. Crickets.

[Fishindude77]

Is it really, though? You left off 2025 for some reason, which is basically holding at 3%.

Yep 2025 is up 0.1% from 2024 to date, big deal.
Nearly the same as 2024.

At least we're not seeing the 4-8% inflation of previous years. I'd call it an improvement.

[ua_guy]

Inflation rates at least seem to be trending the right direction.
2021 4.7%
2022 8%
2023 4.1%
2024 2.9%

Is it really, though? You left off 2025 for some reason, which is basically holding at 3%.

[LivingAlmostLarge]

Inflation rates at least seem to be trending the right direction.
2021 4.7%
2022 8%
2023 4.1%
2024 2.9%

But how much was because of stimulus from Covid? And how much is now natural inflation? That natural inflation is what I told people causes houses to increase in value. Stocks too. Houses are not going back to 2007 prices and probably not even 2015 prices. It's not going down 50% to get back to 2015 prices. Now is it too high? Maybe but there still should be a natural amount it goes up.

[Fishindude77]

Inflation rates at least seem to be trending the right direction.
2021 4.7%
2022 8%
2023 4.1%
2024 2.9%

[ua_guy]

Core inflation is at 3%, which is still elevated. That's not "crushed" as some would suggest, and that's inflation on top of already sky-high prices.

[disneysteve]

oh inflation is rampant. I can't believe they are saying it's not.

The "official" inflation number excludes FOOD and ENERGY which is inane since those two items have been climbing sharply. Of course the inflation rate looks better when you leave out stuff that is sucking up more and more of everyone's money.

[disneysteve]

I'm with uaguy where i think if you can weather the storm you'll come out way ahead, but i'm not sure I can stomach it still.

This is where you have to throw out the math. You need to be able to sleep at night. I have zero doubt that if we maintain a higher stock allocation at 61 years old, we could be far wealthier by the time we're 80+ but to what end? We have enough now. More than enough. The traditional 4% SWR is a good deal more than we are actually spending, and that doesn't even include future SS benefits. If we factor in SS, we could safely spend 60-70K/yr more than we are spending, and that's with a 60/40 portfolio. I'm okay with that. I'd be too worried if I went 80/20 or 90/10.

[LivingAlmostLarge]

Our planner has lined up a new allocation for us which will start at 70/30. The 30% is in CD's which are near vesting and then we will rebaseline that into an allocation even heavier in stocks. I'm still cautious, but he's helped provide me with informed data/reasons to continue to hang ourselves out there. The underlying economic data suggests rather than sabotage, the model is being reimagined to support a select few, where 80-90% of earners are basically set to get their teeth kicked in, and those with the stones to weather the market will emerge victorious - or, at least, still better than the bond market. I could really do without all the increased uncertainty on top of usual market uncertainty.

I've weather 2000/2007/2008/2011/2012/2018/2022. And now in 2025 i'm finally blinking. We've been invested heavily the entire way. I remember thinking in 2006-2010, and I have the excel spreadsheet to prove it, our 401k/roth iras were going down as we kept on pouring money in. It seemed like we were going nowhere and treading water. Even in 2015-2018 we were at a standstill. but can I stomach the drop still?

And we're still very aggressively invested like 95% stocks ETFs/Stocks. and more like 66% ETFs and 29% individual stocks. i'm trying to decide if i'm done. If it's time to add cds or invidual bonds to our portfolio to give it some certainty. About 5 years ago an investment advisor we considered told us to go 100% in stock because we had the income to weather anything and would come out ahead so we did have like 10%-15% bonds. We dropped it and went all in.

I'm with uaguy where i think if you can weather the storm you'll come out way ahead, but i'm not sure I can stomach it still. But if we do I am certain where we end up on the other side will be ridiculous over our number by many, many times over.

oh inflation is rampant. I can't believe they are saying it's not. Just looking at my electric bills.

[ua_guy]

I'm not a market timer by any means but at some point if you truly have "enough" whatever that means for you, why keep putting it all at risk. I've shifted our AA to 55/45. Statistically, that's not dramatically different than 60/40 but I feel more comfortable at that level. With 55% stocks, we'll still reap a lot of the benefit of ongoing market gains and won't give back quite as much with the next correction.

Our planner has lined up a new allocation for us which will start at 70/30. The 30% is in CD's which are near vesting and then we will rebaseline that into an allocation even heavier in stocks. I'm still cautious, but he's helped provide me with informed data/reasons to continue to hang ourselves out there. The underlying economic data suggests rather than sabotage, the model is being reimagined to support a select few, where 80-90% of earners are basically set to get their teeth kicked in, and those with the stones to weather the market will emerge victorious - or, at least, still better than the bond market. I could really do without all the increased uncertainty on top of usual market uncertainty.