Inflation Might Be Making Way For A Better 2023

Inflation Might Be Making Way For A Better 2023
Paul Allison, CFA

about 1 year ago1 min

Today’s inflation data will hardly make a great bedtime story for the next generation, but it’s the tale on all investors’ lips right now. And with good reason: the latest data showed that prices increased by a less-than-expected 7.1% this November from the same time last year, continuing last month's cooling-off trend and making next year’s outlook a whole lot prettier.

Now, optimists might claim that 2023’s looking like a “goldilocks” economy: where the oatmeal – sorry, economic activity – looks warm enough to stimulate employment growth, but not piping hot enough to make inflation boil over again. Try their rose-tinted glasses on for size, and you might see the end of 2022’s nasty economic data and an improving profit outlook for companies. But take them back off, and you’ll soon spot a warning sign: you can’t make a long-term bet based on just two months of (albeit reassuring) data, since macroeconomic stats can be volatile over time. You’ll want to focus on the longer-term trends – after all, while the recent news has optimists popping the festive corks, a couple of nasty data surprises would leave them nursing a bruising hangover.

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