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Below is a chart and brief excerpt from today’s Market Situation Report written by Tier 1 Alpha. If you’re interested in learning more about the Hedgeye-Tier 1 Alpha partnership, there’s more information here. |
Today's bonus chart sheds light on the evolution of auto insurance costs since 1950, presenting a rather stark picture, especially when considering the sharp increase following the pandemic. Key takeaways from yesterday's CPI report include a 12-month change of 20.6% in auto insurance costs, 5.8% for rent, 4.5% for restaurant meals, with decreases in rental cars (-10%), toys (-6.2%) and airfare (-6.1%).
The influence of these changes on the overall CPI is uneven, with auto insurance accounting for 2.82% of the CPI and shelter making up 36.2%. However, the allocation within the CPI does not always reflect the real expenses faced by individuals. For instance, auto insurance expenses rose from 2.57% of the average household budget in 2022 to 2.97% in 2023. Following this trend, it's projected to reach 3.43% or $2,558 of the average household income in 2024, marking a 15.56% year-over-year increase. If we apply the current 20.6% increase, the figure could climb to 3.58% of household budgets, underlining the tangible impact of inflation on families, which might not be fully captured by the headline CPI.
Turning to Danielle DiMartino Booth's insights into Federal Reserve Chair Jay Powell's mindset, her forecasts regarding his policy decisions over the past 36 months have been remarkably precise. According to her analysis, Powell is concentrating on the headline CPI, and unless there's an unforeseen intervention, we might see the expected number of rate cuts for 2024 drop from three or four to just two in the near future.
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Learn more about the Market Situation Report written by Tier 1 Alpha. |
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