Announcer:
4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson-Hurst:
It’s now time for 4 Your Money. We’re joined by David Nelson, CEO of NelsonCorp Wealth Management. Welcome back, David.
David Nelson:
Thanks, Brandy.
Brandy Auterson-Hurst:
So the Fed starts a two-day meeting today, and inflation is right back at the center of it, and you brought a chart that looks at inflation a little differently. What are we looking at here?
David Nelson:
Yeah, it’s always exciting as far as the Federal Reserve, and we have these discussions as far as what’s going to take place. This one is one from the Fed in St. Louis and they call it the price pressure measure. And essentially, what it’s attempting to do is to pull together a whole bunch of economic data and boil it down to one number, and the odds of the inflation running above 2.5% over the next year. So if you look at the blue line, it’s going back to 2000, and the white line is basically looking at 80% odds. And so, if we mush all that stuff together, what we see today is that it actually hit in May 100%. So in other words, the odds are great that inflation will be hotter next year. Now, it’s at 99%. It’s a measurement, it’s interesting to look at, but I think what’s probably the most important part of this is that when we have these high numbers, like we do now, the odds of a year from now, the inflation actually being a little bit higher is pretty high.
Brandy Auterson-Hurst:
Okay. So what does that mean for the Fed this week and actually for the rest of us?
David Nelson:
Yeah. The Fed raised rates in September, so everybody’s probably well aware of that. And when we look at the data like this, that’s very current, this is what the Fed is looking at. I think the conclusion that we come to is that the Fed is going to be very much looking at probably having to raise rates again.
Brandy Auterson-Hurst:
All right, David. As always, thanks for joining us.
David Nelson:
Thank you.
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