Latest / Markets with Megan: A Quick Financial Markets Update / Inflation, Spending & a Fed on Edge | S3 E112 | 01-14-26

Transcript

Inflation, Spending & a Fed on Edge | S3 E112 | 01-14-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: The headlines are going to tell you that inflation is coming down and getting much better.
• 0:04
  Megan Horneman: And I'm going to tell you the opposite side of that.
• 0:06
  Megan Horneman: I'm going to challenge that story.
• 0:07
  Megan Horneman: It's Wednesday, January the 14th, and this is Markets with Megan.
• 0:11
  Megan Horneman: If you like this podcast, you can subscribe to it.
• 0:13
  Megan Horneman: Hit the alarm bell.
• 0:14
  Megan Horneman: You can share it with your friends, family, or colleagues, anybody who wants to get up-to-date information on what we're seeing about the economy and what that means for the markets.
• 0:23
  Megan Horneman: We're going to start here today with inflation, and then we're going to discuss what we saw from consumer spending.
• 0:28
  Megan Horneman: First of all, with inflation, we got the consumer price index yesterday, and today got that producer price index, or what are the wholesalers having to pay to produce those goods?
• 0:38
  Megan Horneman: So starting with the CPI, it came in at on a year-over-year basis, just about as expected on the headlines.
• 0:45
  Megan Horneman: So that includes food, energy, all those volatile items.
• 0:49
  Megan Horneman: And at the core level, it was unchanged at 2.6% on a year-over-year basis, slightly better than what the street had estimated, which was 2.7%.
• 1:00
  Megan Horneman: So we're seeing inflation at the consumer level still above that Fed's target.
• 1:05
  Megan Horneman: And people are cheering this news because, hey, the inflation wasn't as bad as the analysts had expected.
• 1:11
  Megan Horneman: But let's dig into the details.
• 1:12
  Megan Horneman: And this is why we're seeing consumers continue to fight back with high prices.
• 1:17
  Megan Horneman: So when you look at food prices, they rose seven-tenths of a percent on a month-over-month basis and are rising 3.1% year over year.
• 1:25
  Megan Horneman: If you look at food away from home, so spending at things like restaurants, that's rising 4.1% on a year-over-year basis.
• 1:33
  Megan Horneman: Energy services, so that's things like your utilities, these things rose 1% on a month-over-month basis and are up 7.7% over the past year.
• 1:44
  Megan Horneman: Now, services where we have to spend the majority of our money when you exclude energy, that's rising 3% on a year-over-year basis.
• 1:52
  Megan Horneman: Owner's equivalent rent or what you could uh get for renting your home, and this captures the high home prices, that rose three tenths, and it's it's growing 3.4% on a year-over-year basis.
• 2:05
  Megan Horneman: Medical care services, they're rising 3.5% on a year-over-year basis.
• 2:10
  Megan Horneman: And when you look at it hospital services at a big jump, they're 6.6% on an annual basis.
• 2:18
  Megan Horneman: When you look at auto maintenance, 5.4% on a year-over-year basis, these are things that we have to spend money on.
• 2:25
  Megan Horneman: And these are the things that are just rising well above what the Fed is looking for, and it is really getting disguised in some of these other nuances on how this is calculated, and people think inflation is getting better.
• 2:37
  Megan Horneman: It's not getting that much better.
• 2:40
  Megan Horneman: When you look at the producer level, so um the again, people cheered the fact that the core at when you exclude food, energy, and trade for the month of November did not rise at all.
• 2:52
  Megan Horneman: But when you look at the producer price index and you exclude food, energy, and trade, and you look on that on a year-over-year basis, it's up three and a half percent.
• 3:04
  Megan Horneman: So it's higher than it was last month, and that is well above what the Fed's looking for from inflation.
• 3:10
  Megan Horneman: And when you look at that, it's all in that service sector.
• 3:14
  Megan Horneman: Transportation services, professional services, healthcare services, administrators, administrative services.
• 3:21
  Megan Horneman: This is inflation.
• 3:23
  Megan Horneman: And we are concerned that the Fed is not paying close enough attention to these inflation numbers.
• 3:29
  Megan Horneman: We do not want to get into an inflationary spiral again, and we think that's a big risk that we may have this year, that we're gonna get some inflation flaring up this year.
• 3:39
  Megan Horneman: Now, from the consumer standpoint, we got the retail sales data for the month of November, and it was solid.
• 3:45
  Megan Horneman: This is continues to conflict the numbers we're seeing from a confidence perspective, where confidence was hovering near record lows in November, and yet spending continued to rise.
• 3:56
  Megan Horneman: I will say this that these retail sales numbers are not inflation adjusted.
• 4:01
  Megan Horneman: So when we look in the month and what we saw big increases in auto sale on autos, so the purchasing an automobile, that's higher again.
• 4:11
  Megan Horneman: And again, is that inflationary or is that just more demand for autos?
• 4:15
  Megan Horneman: Um, building materials, gas, sporting goods, restaurants, clothing, these are not only things that are necessity, but some of these things also may be impacted from the tariff standpoint.
• 4:27
  Megan Horneman: So if these aren't inflation, if these aren't inflation adjusted numbers, that gives us an idea that this is inflationary and eventually this can filter into those CPI numbers and also into some of the other inflation indicators.
• 4:42
  Megan Horneman: Now, the markets have been weak here to start off the past couple days, start off this week.
• 4:47
  Megan Horneman: We'll continue to watch it, but I think there is some concern that the Fed's not some people are starting to understand that, hey, maybe the Fed hasn't gotten inflation under control the way that most of the headlines are saying that it is.
• 4:59
  Megan Horneman: That's all we have today.
• 5:00
  Megan Horneman: If you want a history of our podcast, you go to marketswithmegan.fm.
• 5:03
  Megan Horneman: Thank you.