{"id":13212,"date":"2024-06-10T18:50:37","date_gmt":"2024-06-10T18:50:37","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13212"},"modified":"2024-06-10T18:50:37","modified_gmt":"2024-06-10T18:50:37","slug":"inflation-update-the-wealth-effect-and-consumer-spending-opec-oil-cuts","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/inflation-update-the-wealth-effect-and-consumer-spending-opec-oil-cuts\/","title":{"rendered":"Inflation Update, The ‘Wealth Effect’ And Consumer Spending, OPEC+ Oil Cuts"},"content":{"rendered":"\n

In this week\u2019s Steady Investor, we’re spotlighting key market updates that every investor should keep an eye on, such as:<\/p>\n\n\n\n

\u2022 An update on the Fed and inflation
\u2022 See what factor is contributing to consumer spending
\u2022 OPEC+ agrees to oil production cuts through 2025<\/p>\n\n\n\n

Fed\u2019s Preferred Inflation Index Registers at 2.7% in April<\/strong> \u2013 The Federal Reserve\u2019s preferred inflation measure, the headline PCE price index, rose 2.7% y\/y in April\u2014the same as March\u2014with core prices up 2.8%. Every month, the PCE price index rose 0.3% in April, consistent with February and March\u2019s prints.1<\/sup><\/p>\n\n\n\n

Personal Consumption Expenditures (PCE) Price Index Year-Over-Year % Change, All Items<\/em><\/strong><\/p>\n\n\n\n

\"\"
Source: Federal Reserve Bank of St. Louis2<\/sup><\/em><\/strong><\/figcaption><\/figure>\n\n\n\n

Do You Know Your Net Worth?<\/a><\/span><\/strong><\/p>\n\n\n\n

While it’s challenging to accurately anticipate market performance, you can strategically position your investments to navigate potential changes ahead.<\/p>\n\n\n\n

Evaluating your net worth is a great place to start. It isn\u2019t as simple as some investors think. So, to guide you, we\u2019re offering our free guide, Measuring Your Net Worth3<\/sup><\/a><\/span><\/em><\/strong>, which helps answer important financial questions like:<\/p>\n\n\n\n

\u2022 How do I correctly calculate my net worth?
\u2022 How does my net worth compare to other households?
\u2022 What strategies can help me grow my net worth over time?
\u2022 What are the risks and factors that can help me grow my net worth?<\/p>\n\n\n\n

If you have $500,000 or more to invest and want to understand how to measure your net worth, click on the link below to get your copy today!<\/p>\n\n\n\n

Download Zacks Guide, Measuring Your Net Worth3<\/sup><\/em><\/a><\/span><\/strong><\/p>\n\n\n\n

This inflation data could be interpreted as neither positive nor negative. It showed that inflation was not getting any worse, but also that it didn\u2019t get any better in April. As a result, the Fed\u2019s stance on monetary policy in 2024 probably didn\u2019t change. Looking beyond inflation, however, there was some data in the Commerce Department\u2019s report that could soften the Fed\u2019s stance on interest rates. Personal incomes rose 0.3% in April from March, which was a significant step down from the 0.5% month-over-month rate posted in March. Personal spending also decelerated quite a bit in April (0.2%), declining from a 0.7% month-over-month pace set in March. These figures also aren\u2019t adjusted for inflation, meaning that incomes and spending were flat in April. This data was combined with a revised Q1 2024 GDP report, where the Bureau of Economic Analysis reported 1.3% GDP growth for the first quarter, down from the previous 1.6% estimate. Any signs of economic softening bolster the case for rate cuts later in 2024, especially if inflation does manage to come down a bit further over the summer.<\/p>\n\n\n\n

A Factor That May Be Helping Consumer Spending: The Wealth Effect<\/strong> \u2013 The U.S. labor market remains tight, with the unemployment rate below 4% and incomes keeping pace with inflation. Plentiful jobs and higher wages have helped U.S. consumers continue spending over the past couple of years, but there\u2019s another factor that could be supporting spending, and by extension, the economy at large: the wealth effect. Inflation has torn into the buying power of many U.S. consumers, but the higher interest rates that followed have also been putting unprecedented levels of passive income into the pockets of savers and investors. According to the Commerce Department, Americans earned $3.7 trillion in Q1 2024 from interest and dividends, which is miles above the $770 billion recorded in 2020. According to the Federal Reserve, the amount of wealth held in stocks, real estate, and other assets reached its highest level ever in Q4 2023. Higher overall levels of wealth arguably factor as a positive in spending decisions, even as inflation pushes in the other direction.4<\/sup><\/p>\n\n\n\n

OPEC+ Agrees to Oil Production Cuts Through 2025<\/strong> \u2013 On Sunday, OPEC+ agreed to extend production cuts into 2025, in an effort to limit supply and keep a floor on prices. Back in April 2023, OPEC+ announced production cuts of 1.65 million barrels per day, which was set to expire at the end of the year. The group had also implemented additional cuts of 2.2 million barrels per day starting last November. All told, OPEC+\u2019s cuts amount to about 5.7% of global crude supply, which is not insignificant but also is arguably not enough to have a dramatic impact on prices. Case-in-point: global oil prices have fallen by a little over 10% since OPEC+ started announcing cuts and amidst conflict in the Middle East. A key reason for oil price stability has been U.S. output, which hit a record in 2023. Other major, non-OPEC producers like Canada and Brazil have also increased production, neutralizing the impact of OPEC+ cuts.5<\/sup><\/p>\n\n\n\n

The market is ever-evolving, and knowing your net worth can be key to your financial health. By calculating your net worth, you gain a clearer picture of your progress toward long-term investment goals.<\/p>\n\n\n\n

If you haven\u2019t already, we recommend reading our free guide, Measuring Your Net Worth.6<\/sup><\/a><\/span><\/strong><\/em>
You\u2019ll get answers to important financial questions like:<\/p>\n\n\n\n

\u2022 How do I correctly calculate my net worth?
\u2022 How does my net worth compare to other households?
\u2022 What strategies can help me grow my net worth over time?
\u2022 What are the risks and factors that can help me grow my net worth?<\/p>\n\n\n\n

If you have $500,000 or more to invest, simply click on the link below to get your copy today!<\/p>\n","protected":false},"excerpt":{"rendered":"

Fed’s preferred inflation price index at 2.7% in April, ‘wealth effect’ may be boosting consumer spending, OPEC+ agrees to production cuts through 2025<\/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-13212","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\/13212","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=13212"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13212\/revisions"}],"predecessor-version":[{"id":13215,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13212\/revisions\/13215"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=13212"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=13212"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=13212"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}