Lower Inflation for (Most) Goods and Services

Plus: What To Watch This Earnings Season You are receiving this limited-time email resource as a subscriber to Kiplinger's free e-newsletters. We will continue to publish this daily throughout the height of the coronavirus outbreak. To unsubscribe at any time, simply click the link in the footer below. APRIL 13, 2020 [View in browser]( [Corona]( WHAT YOU NEED TO KNOW ABOUT THE CORONAVIRUS OUTBREAK The coronavirus pandemic is driving down inflation, as prices of many goods and services plummet. In March alone, airline fares dropped 13% on average. Gasoline prices dropped 11%; hotel and motel rates 8%; car rental rates 7%; and train fare more than 4%. The biggest declines have already happened, but prices of travel-related goods and services will remain soft for most of this year, as people avoid risking infection. The same goes for any kind of activity that involves large gatherings, even after lockdown orders are lifted: Concerts, sporting events, even dining at restaurants. SEE ALSO: [11 Best Tech Stocks for the New Coronavirus Norm]( Expect overall inflation to come in around 1% this year instead of the normal 2%, because of consumer caution. When lockdowns are withdrawn, apparel prices at stores are likely to be discounted as retailers liquidate inventories of now out-of-fashion clothing. Car dealers are also likely to offer discounts to try to pump up sales. But there will be a few sharp price increases if shortages develop. Many consumer products are mass produced at just a few facilities, so a virus-induced shutdown of one plant could crimp availability. As an example, the shutdown of a major pork processing plant in South Dakota may not cause an actual shortage, given the amount of pork already in cold storage, but news of such events tends to cause panic buying. Finally, low inflation will keep the Social Security cost-of-living adjustment in January of next year below 1%. Ready or not, here comes earnings season, which begins in earnest this week. Thanks to the coronavirus outbreak, it's going to be unlike anything we've seen in some time. Several companies that typically report around this time still haven't scheduled their quarterly releases. As we've mentioned before, numerous firms have already pulled their operational guidance because COVID-19 has simply clouded their projections. But Wall Street's pros aren't expecting anything pretty. FactSet Insights recently reported that analyst estimates for S&P 500 companies' Q1 earnings declined by 9.1% between December and March -- the largest decline since Q1 2016, but nowhere near as steep as the 34.3% and 31.3% cuts in estimates during Q4 2008 and Q1 2009, the heart of the Great Recession. We urge investors keep their eyes on corporate earnings, not just to track individual investments, but also for clues as to how each industry is handling the downturn. Wondering where to start? We've highlighted a few noteworthy reports to watch in our [weekly earnings calendar](. SPONSORED CONTENT FROM SMARTASSET [7 Mistakes Everyone Makes When Hiring A Financial Advisor]( [7 Mistakes Everyone Makes When Hiring A Financial Advisor]( Working with a financial advisor is a crucial part of any retirement plan, but most people make these avoidable mistakes when hiring one. [READ MORE]( RELATED LINKS [Housing Slowdown Will Be Temporary]( [Coronavirus and Your 45-Day 1031 Exchange Deadline]( [Buffett Pulls Back on Airline Stocks, But Don't Fret ... Yet]( [How to Calculate the Break-Even Age for Taking Social Security]( [Mark Zandi: The U.S. Economy Won't Recover Until We Have a Vaccine or Treatment]( [Kiplinger] [Facebook]( [Twitter]( [LinkedIn]( [Google+]( [Tumbler]( Send this to a friend. [Click here.]( All content ©2020 The Kiplinger Washington Editors 1100 13th Street, NW, Suite 1000 Washington, D.C. 20005 Thank you for subscribing to Kiplinger's A Step Ahead, a free resource to help readers navigate special circumstances such as the coronavirus outbreak. If you ever wish to stop receiving this daily service, please [click here to unsubscribe.](