Today's Scoop:

Hey friends, here’s what you need to know today…

1. Most living costs are still rising, but not all.

2. Inflation may be sticking around for a while.

3. Consumers are spending less but are still financially healthy.

S&P 500: 4,129.20
1Mo: +1% | 1Yr: +5% | 5Yr: +51%

The market inched higher today as investors celebrated a better-than-expected inflation report.

Most living costs are still on the rise, but not all. The Bureau of Labor Statistics’ Consumer Price Index [🤓] rose 0.4% in April after rising only 0.1% in March. The most significant contributor was rising rent and home prices, though government statistics tend to run on a lag for real estate. More real-time indicators have pointed to stalling or declining home and rent prices in recent months. Gas and used car prices jumped in April, but grocery costs have stopped climbing. Airline ticket prices actually fell.

Overall, living costs are 4.9% higher than a year ago. That’s the lowest one-year inflation number in two years, but prices are still rising month-to-month. Normal annual inflation is around 1-2%, with monthly inclines of up to 0.2%. Prices are no longer rising at the breakneck pace of last year, but inflation may take a long time to get back to pre-pandemic speeds, if ever. Make sure your income and savings are growing at least as fast as your living costs.

The US consumer is still healthy but spending less. Bank of America reported the first year-over-year decline in debit and credit card transactions in April, though transaction numbers were up from March. America’s second-biggest bank said savings buffers are still fairly high. Median checking and savings balances are more than 40% higher than in 2019 across all income levels.

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• Airbnb prices stop climbing

• Toyota dials up its electric ambitions

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Consumer Price Index (CPI)

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.

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 ok. Low inflation (~1-2% per year) 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.

Policymakers have been raising interest rates to slow economic activity and cool spending so prices stop rising so quickly.

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Here are our top priorities for today’s challenges:

1. Rising Rates & More Layoffs: Make sure you have an emergency savings in cash. Use SaveBetter to make sure your savings account pays you at least 4%.

2. Higher Living Costs & Tighter Budgets: Make sure to avoid debt by tracking your spending, building savings, and spending carefully. We use Guac to save while spending and get cash back on 200+ brands.

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