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Hey friend - Thanksgiving break is on the horizon. Then it’s the holidays. The year’s basically over. You got this.
Here’s what you need to know today…
Big Picture
The cost of living stopped climbing in October.
Economic policy battling inflation seems to be working.
Small businesses aren’t feeling optimistic.
The Market: ⬆️ +1.9%
S&P 500: 4,495.70
1Mo: +3% | 1Yr: +13% | 5Yr: +64%
The market had its best day in months, surging as investors celebrated the encouraging inflation report. Zero inflation in October is great news for the economy in many ways.
Living costs stopped rising last month after years of inflation. The Bureau of Labor Statistics' Consumer Price Index (CPI) [🤓] showed zero month-on-month change for October, driven mainly by falling energy costs. Prices at the pump have been declining for weeks. Food costs climbed last month, particularly for meat and dairy products. Price tags have fallen for new or used cars, but leasing costs are higher. Eating out at restaurants keeps getting more expensive. Overall, most things we spend on are still 3.2% more expensive than a year ago.
Inflation levels might be even better than they appear. When stripping out volatile food and energy costs, the core CPI increased 0.2% for the month. Higher home prices and rental costs are still the most significant inflators, but government home pricing statistics are always a little stale and funky. More real-time indicators have shown home prices rising slowly or decreasing in many areas. So, this is definitely the kind of cooling inflation data policymakers want to see to feel like their moves are working. Hopefully, they decide to ease back restrictions and make borrowing less expensive.
Small businesses are still feeling pessimistic about the future. The National Federation of Independent Business sentiment index fell for the third consecutive month, with many business owners concerned about the lingering possibility of a recession. Supply and borrowing costs keep rising, sales are slowing, and finding workers is getting harder.
How are you feeling about the economy? |
Company Scoops 🗣️🌎💰
💡How are these companies doing? Judge their decisions. Investing starts with an opinion.
 Starbucks | Coffee Strike Thousands of Starbucks baristas will stop working during one of the biggest promotional days of the year to protest Starbucks' refusal to negotiate with unions fairly. More than 350 cafes have unionized for better pay and working conditions. |
 Unilever | Sharing Innovation Unilever will help the food industry reduce carbon emissions by sharing patents for its energy-efficient freezer technology for lower-temperature ice cream storage. In-store freezers create 10% of Unilever's total supply chain emissions. |
 Rivian | Big Expansion Rivian will borrow $15 billion to begin building its second manufacturing plant, employing over 7,000 people and building 400,000 vehicles annually in Georgia. The electric truckmaker's existing factory will produce 50,000 vehicles this year. |
 Home Depot | No Home Improvement Home Depot made less money this year as customers tightened spending on bigger home remodeling and renovation projects amid higher prices. The construction retailer has come down from the lockdown-fueled home construction boom. |
 JBS | Cattle Shortage The world's largest meat producer suffered an 80% drop in its North American beef profits due to a strained cattle supply that inflated costs, dragging down profits overall. JBS made more money on higher pork demand from frugal consumers. |
(These links only work for 24 hours while the story is live.)
Inside Scoop 🤓
What is the Consumer Price Index (CPI), and why does it matter?
The Consumer Price Index (CPI) is one of the main ways economists track inflation. Inflation is the rate at which things get more expensive. The CPI looks at a set basket of stuff your average consumer spends money on and tracks how much it costs each month. The rate of change is inflation.
One important thing to know: inflation is most often quoted as an annual number, like "inflation rose 3.2% in October," but the annual number might not always be the best reference in unusual times like the past two years. If we're trying to understand whether living costs are still surging, the monthly rates of change are most helpful. If prices rose by 0.6% in one month and 0.4% in the next, inflation declined, regardless of the change over the past twelve months. The annual number helps us remember the pain we've experienced, but monthly numbers help us understand what's happening today.
Prices rarely go down. It's normal for things to get more expensive. You'll never be able to buy a Coke for a quarter again, but that's okay. Low inflation (~1-2% per year, 0.0-0.2% per month) is standard and almost unnoticeable. High inflation, like we saw last year, with prices of essential goods going up nearly 7-10% per year, is a problem. It's unmanageable, especially if our incomes aren't rising in tandem. Low inflation, where incomes keep up or outpace rising living costs, is the goal for economic policy, not zero or negative inflation.
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