The latest inflation data suggests we could be moving past the peak in some areas.
Sounds great, right?
The data is certainly pointing in the right direction, but it’s too soon to celebrate because it’s just not enough data yet to call it a sustained trend.
We’re also seeing signs that persistent inflation has led consumers to shift their spending. That could make inflation improvements uneven and result in some winners and losers across different sectors.
Winners could be travel and auto companies benefiting from pent-up demand. Losers could be homebuilders and luxury brands hit by higher interest rates and shifts in shopping trends.
Markets rallied for weeks on optimism about data but there are a lot of hurdles ahead, including the Federal Reserve’s interest rate hikes and earnings results from companies affected by those consumer spending changes. Plus, election season.
In other news, what’s in the Inflation Reduction Act for you?
The Act mainly addresses two big areas: green energy and Medicare.
On the green side, the bill includes a slew of incentives to boost adoption of things like solar panels and electric vehicles.
However, many of the incentives may not be immediately available, as many of the specifics need to be figured out. Want a full rundown of the tax credits and rebates? Here you go.
On the Medicare side, the bill includes some interesting prospects for retirees:
- Starting in 2023, insulin costs for Medicare enrollees will be capped and vaccine cost-sharing will be eliminated.
- Medicare prescription drug plans could see benefit changes in 2024 and 2025 designed to lower costs.
- Medicare managers could have the power to negotiate (some) drug prices starting in 2026. That could mean cost savings for retirees as well as potentially lower premiums.
- If you purchase insurance through an Affordable Care Act marketplace, you could qualify for an expanded premium tax credit through 2025 to help lower monthly costs.
As always, we’ll have to wait for the legislation to mature before we can fully understand its total impact.
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