Yesterday, inflation clocked in at 4.9%. That’s the lowest it’s been in two years.
So what does that mean?
If the cup is half full, it means the end may be in sight.
The Fed signaled (lightly) that they’ll pause raising rates. And if inflation continues on a downtrend, they might be done for good.
And if we do go into a recession (although I’d argue we’re already in one, even if only regionalized), then the Fed will have some dry powder.
(That also means we’ve avoided the underlying catastrophic scenario we’ve been living in for 15 years – if a recession hit us then the Fed wouldn’t have room to cut and we’d have to just ride it out.)
So I’m hopeful that the worst is over plus we’ve got a buffer if the stuff really hits the fan.
On the other hand, if the cup is half empty, then a deeper recession is imminent, banks will fail and the markets might not cooperate for another 5 quarters.
Which scenario is more likely?
It shouldn’t matter.
If you’re invested correctly, even a long-term drought won’t throw off your plans.
Plus if you’re invested correctly, you get the added bonus of enjoying the feeling of hopefulness that comes when you’ve already prepared for the worst.
