The 'Inflation Illusion' Still Haunts the Economy

The media is selling the "catastrophic inflation" narrative. But one inflation gauge tells us this story just isn't true today... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [DailyWealth] The 'Inflation Illusion' Still Haunts the Economy By Sean Michael Cummings, analyst, True Wealth --------------------------------------------------------------- Cookie Monster says the dollar is losing its buying power... Last week, the Sesame Street character's official account on X (formerly Twitter) issued the following viral posts... By "shrinkflation," the Muppet is referring to a dreaded economic trend... Companies "shrink" the size or weight of a product while keeping the price the same. The cost per unit is then inflated. This boosts profits... stiffs consumers... and ultimately debases the value of currency. Obviously, Cookie Monster isn't an economist. But his tweet carries some ominous economic subtext: Inflation still isn't under control. Many brands are playing on this narrative today. After all, we're still seeing higher prices at the grocery store... And if you base your knowledge of the economy on spokespeople like Cookie Monster, it's easy to believe inflation is still soaring. But the truth is, the rate of inflation has dropped in the past 18 months. It's not an immediate headwind for the economy and stock market. As I'll explain today, the folks telling you otherwise are selling an illusion... --------------------------------------------------------------- Recommended Links: [Make This Election Money Move NOW]( This could be the SINGLE most important month of the presidential-election year, but NOT for the reasons you might think. Because while most Americans will be focused on the elections and polling data... they'll be completely blindsided by a massive election surprise headed straight for U.S. stocks, according to Marc Chaikin. That's why he's urging you to make ONE critical move with your money. [Get the full details here](. --------------------------------------------------------------- [Beware Executive Order 14067]( Last year, the Federal Reserve quietly rolled out the first phase of currency changes that could make President Joe Biden's Executive Order 14067 a reality. One 24-year market veteran reveals a hidden clause in Section 4 that could transform the U.S. dollar forever as soon as today, March 11. [Don't buy another stock until you see the proof, right here](. --------------------------------------------------------------- Cookie Monster isn't the only one who's worried about inflation. Comic-book superheroes are, too... Ryan Reynolds plays a zany costumed antihero in Marvel's Deadpool movies. He also holds an ownership stake in budget telecom company Mint Mobile – and he's its chief spokesman, too. The Mint Mobile team has placed ads on various podcasts and streaming platforms. So you might have heard one of Reynolds' recent ads about inflation. Here's one I heard just the other day... At Mint Mobile, we like to do the opposite of what Big Wireless does. They charge you a lot... we charge you a little... So naturally, when they announced they'd be raising their prices due to inflation, we decided to deflate our prices due to not hating you. This ad has been kicked around the Internet in some form since June 2022. But it's still in circulation today... stoking the same anxieties as Cookie Monster's tweet. The media is in love with this "catastrophic inflation" narrative... But if we look at the data, that level of inflation is no longer present. One way we can see this is by using the U.S. Personal Consumption Expenditures ("PCE") Price Index... This is a widely followed inflation gauge in the U.S. It measures the average price paid by consumers for goods and services. And it's the Federal Reserve's preferred gauge to help it determine monetary policy. Take a look at the inflation rate based on this index... The Fed's ideal inflation rate is 2% year over year. Back in 2022, PCE inflation was hovering at 7.1%... But today, it's less than a percentage point above the Fed's target at 2.4% (as of January). The peak above 7% appeared the same month Reynolds' inflation ad first hit the Internet. Now, it's true that prices have risen fast in the past few years. And price gains are cumulative. That means Americans are still dealing with elevated prices – which is what Cookie Monster is referring to. But higher prices are a far cry from higher inflation. Instead, inflation is the rate at which prices increase... And today, that rate is slowing dramatically. It's a common mistake to think inflation is still soaring right now. The mainstream media is aggressively pushing this story – and when you look at your grocery-store receipt, it seems like the only explanation. So, like a lot of folks, you might believe things are only getting worse and worse... not better. But price growth is slowing way down. The soaring inflation we saw in 2020 and 2021 just isn't present in the economy today. And from an investment perspective, this bearish "inflation illusion" is creating an opportunity for contrarians... As long as the fear of "catastrophic inflation" has its hooks in the American consumer, folks will only be able to see downside that isn't there. This is a recipe for irrational selling... But for courageous investors, it's setting up a chance to get in cheap and go long. Good investing, Sean Michael Cummings Further Reading The media was quick to judge Apple's latest product, the Vision Pro. Many folks dumped shares due to the bad press. But this sell-off means one of the world's best businesses is now on sale – and that's setting up a rare chance for contrarian investors... [Read more here](. A recent rally has pushed one blue-chip stock into wildly overbought territory. Normally, this would be cause for concern. But history tells us we shouldn't worry about this world-class business. Double-digit gains are likely over the next year... [Learn more here](. Market Notes HIGHS AND LOWS NEW HIGHS OF NOTE LAST WEEK JPMorgan Chase (JPM)... financial giant Bank of America (BAC)... financial giant AbbVie (ABBV)... pharmaceuticals GSK (GSK)... pharmaceuticals Thermo Fisher Scientific (TMO)... life sciences Abbott Laboratories (ABT)... health care giant Boston Scientific (BSX)... medical devices Advanced Micro Devices (AMD)... semiconductors Qualcomm (QCOM)... semiconductors IBM (IBM)... computers Meta Platforms (META)... social media giant Spotify Technology (SPOT)... audio streaming Airbnb (ABNB)... online vacation rentals Walmart (WMT)... "World Dominator" of discount retail Target (TGT)... big-box retailer Kroger (KR)... grocery stores Colgate-Palmolive (CL)... household goods Sherwin-Williams (SHW)... paint General Electric (GE)... manufacturing AutoZone (AZO)... auto parts Enterprise Products Partners (EPD)... oil and gas NEW LOWS OF NOTE LAST WEEK Humana (HUM)... health insurance C.H. Robinson Worldwide (CHRW)... shipping technology Charter Communications (CHTR)... cable TV --------------------------------------------------------------- [Tell us what you think of this content]( [We value our subscribers' feedback. To help us improve your experience, we'd like to ask you a couple brief questions.]( [Click here to rate this e-mail]( You have received this e-mail as part of your subscription to DailyWealth. If you no longer want to receive e-mails from DailyWealth [click here](. Published by Stansberry Research. You're receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. For questions about your account or to speak with customer service, call 888-261-2693 (U.S.) or 443-839-0986 (international) Monday-Friday, 9 a.m.-5 p.m. Eastern time. Or e-mail info@stansberryresearch.com. Please note: The law prohibits us from giving personalized financial advice. © 2024 Stansberry Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Stansberry Research, 1125 N Charles St, Baltimore, MD 21201 or [stansberryresearch.com](. Any brokers mentioned constitute a partial list of available brokers and is for your information only. Stansberry Research does not recommend or endorse any brokers, dealers, or investment advisors. Stansberry Research forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Stansberry Research (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation. This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.