{"id":12407,"date":"2023-04-24T04:32:47","date_gmt":"2023-04-24T04:32:47","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=12407"},"modified":"2023-04-24T04:32:47","modified_gmt":"2023-04-24T04:32:47","slug":"u-k-inflation-outpaces-u-s-china-in-growth-mode-transportation-stocks-underperform","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/u-k-inflation-outpaces-u-s-china-in-growth-mode-transportation-stocks-underperform\/","title":{"rendered":"U.K. Inflation Outpaces U.S., China in Growth Mode, Transportation Stocks Underperform"},"content":{"rendered":"\n<p><strong>Think Inflation is High in the U.S.? Not Compared to the U.K. \u2013 <\/strong>Inflation in the U.S. has been the big story over the past two years. In March, the Consumer Price Index (CPI) posted a 5% year-over-year gain, a step down from February\u2019s 6% year-over-year increase and marking the smallest increase since May 2021. For the Federal Reserve and many market watchers, this level of inflation is still way too high, even though it marks a drastic improvement from this time last year. It\u2019s nothing compared to inflation in the U.K. \u2013 in March, consumer prices rose 10.1% year-over-year which was down only slightly from February\u2019s 10.4% increase. The core rate of inflation, which strips out volatile food and energy prices, rose 6.2%, which is higher than the U.S.\u2019s 5.6% core CPI increase (though not by much). Therein lies the key issue in the U.K. \u2013 food and energy. In the U.S., the energy component decreased -6.4% year-over-year in March, while in the U.K. energy prices shot higher by a staggering +40.5%. For food, prices were up 19.1% year-over-year in March, which was the sharpest increase since 1977. Contributing to the inflation problem are labor shortages in the U.K., which are being made worse by strikes (over high prices) and illnesses stemming from a hobbled health care system.<sup>1<\/sup><\/p>\n\n\n\n<p><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2023_04_24&amp;content=retirement_strategy_guide\">How to Protect Your Retirement from Market Volatility<\/a><\/u><\/strong><\/p>\n\n\n\n<p>In today\u2019s volatile market, do you have an effective retirement strategy in place that withstands the market\u2019s ups and downs?<\/p>\n\n\n\n<p>In our exclusive guide, <em>How Solid Is Your Retirement Strategy, <\/em>you will get insight into key strategies that help preserve your financial security in retirement, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The importance of flexible portfolio allocation<\/li>\n\n\n\n<li>Why keeping some liquid assets can potentially help you preserve more wealth<\/li>\n\n\n\n<li>Understanding your risk tolerance in case of a market downturn<\/li>\n\n\n\n<li>Plus, more strategies to help you protect your retirement assets<\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest, get our free guide by clicking on the link below.<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2023_04_24&amp;content=retirement_strategy_guide\"><u>Get our FREE guide: <em>How Solid Is Your Retirement Strategy?<\/em><\/u><\/a><\/strong><sup><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2023_04_24&amp;content=retirement_strategy_guide\">2<\/a><\/sup><\/p>\n\n\n\n<p><strong>China\u2019s Economy is Back in Growth Mode \u2013 <\/strong>China\u2019s economy is coming back to life. In Q1, China\u2019s National Bureau of Statistics reported that the economy grew by 4.5% year-over-year, nearly double the 2.9% pace set in the same period last year. Economic growth was largely driven by a surge in consumer spending, which saw retail sales jump by 10% in March. This uptick in consumer spending was the fastest pace in almost two years and is a clear signal that consumers are enthused to be out of China\u2019s harsh zero-Covid policies. The shift to consumer spending also is encouraging for economists who had grown concerned that too much of China\u2019s economic growth was being fueled by investment, which was essentially state-sponsored infrastructure and real estate projects. The transition was clear in the data: in March, the year-over-year gain in retail sales was faster than the increase in industrial production and fixed-asset investment, which it should be noted also increased nicely. Consumer spending at restaurants, for instance, grew 26% year-over-year. Generally speaking, what\u2019s good for the world\u2019s second-largest economy is good for broader global economic growth, but it\u2019s arguably too early to infer that China\u2019s growth rebound will be felt globally. Since a big portion of the growth was from domestic consumption, there may not be a significant effect on other developed countries.<sup>3<\/sup><\/p>\n\n\n\n<p><strong>Transportation Stocks Have Been Underperforming \u2013 Sign of Future Economic Weakness? <\/strong>The Dow Jones Transportation Average \u2013 which tracks companies across the airline, railroad, and trucking sectors \u2013 has been underperforming the broader Dow Jones Industrial Average by nearly 7% since early February. This is a trend that warrants following \u2013 historically, transportation stocks have come under greater selling pressure than the broad market during periods of economic weakness, as demand for goods, materials, and travel falls. It may be that investors are selling off economically sensitive transportation stocks in anticipation of an economic recession later in the year. At the same time, however, investors have been rotating significantly into growth-sensitive tech stocks as interest rates (measured by the 10-year U.S. Treasury) have come down.<sup>4<\/sup><\/p>\n\n\n\n<p><strong>Protecting Your Retirement Portfolio \u2013 <\/strong>It\u2019s crucial for investors to start early in order to build a comfortable nest egg for their retirement. Still many investors may be wondering, what if the market plunges?<\/p>\n\n\n\n<p>In our exclusive guide, <em><strong><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2023_04_24&amp;content=retirement_strategy_guide\">How Solid Is Your Retirement Strategy<sup>5<\/sup><\/a><\/strong><\/em>, you\u2019ll get valuable and practical ideas to help build a \u201cweatherproof\u201d retirement strategy that can potentially protect your retirement nest egg from any storm that could threaten your financial security.<\/p>\n\n\n\n<p>If you have $500,000 or more to invest, get our free guide below!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>U.K. Food and energy prices up 40% in March, China&#8217;s economy grows 4.5% year-over-year, transportation stock weakness may signal recession ahead<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-12407","post","type-post","status-publish","format-standard","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12407","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=12407"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12407\/revisions"}],"predecessor-version":[{"id":12409,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12407\/revisions\/12409"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=12407"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=12407"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=12407"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}