President Donald Trump’s tariff policy has faced significant criticism, primarily concerning its potential to drive inflation higher. However, recent data from the Consumer Price Index (CPI) report has led to some unexpected optimism regarding inflation rates. CNBC senior economics reporter Steve Liesman, who has been critical of the tariffs, reacted live on air, expressing surprise at the CPI numbers.
The headline U.S. CPI showed a year-over-year increase of 2.7% for November, a decrease from 3.0% in September. In addition, the core CPI, which excludes the prices of food and energy, fell to 2.6%, also down from 3.0% the previous month. Liesman noted that these numbers are “very good,” especially given the anticipated higher inflation figures.
As Liesman analyzed the monthly figures, he pointed out additional signs of a positive trend: the seasonally adjusted index for all items, excluding food and energy, rose by just 0.2% over two months—a sign of relatively low monthly inflation rates. His reaction was echoed by Harvard economist Ken Rogoff, who also expressed surprise at the lower-than-expected inflation figures, suggesting that the news is likely to be received positively by both the president and investors, potentially influencing future interest rates.
Following the CPI report, markets responded favorably, ending a four-day slump. The Nasdaq Composite surged by 1.4%, while the S&P 500 climbed approximately 0.8%. Momentum continued into the following day, with further increases observed. With the Federal Reserve already having cut interest rates three times in the current year, the cooling inflation could encourage additional cuts moving forward, thus providing a favorable environment for investors.
Legendary investor Warren Buffett advocates for a diversified investment strategy, suggesting that owning shares in an S&P 500 index fund is advisable for most individuals. This approach offers exposure to a wide range of industries without requiring constant trading or monitoring. Additionally, platforms such as Robinhood enable individuals to invest in exchange-traded funds (ETFs), allowing them to build a nest egg with minimal fees.
Lower interest rates are anticipated to stimulate not only the stock market but also the real estate sector. More affordable mortgages may increase home-buying demand and stabilize property values. Notably, real estate has historically been a hedge against inflation, as property values and rents tend to rise with the cost of living.
Real estate has served as a pillar of wealth in America, and President Trump, who built his fortune in this sector prior to entering politics, is well aware of this. High-quality properties often yield rental income, providing steady cash flow. Buffett himself has also recognized the value of real estate as a productive asset.
For those who may not have substantial capital to invest directly in properties, crowdfunding platforms provide alternative avenues for exposure. Companies like Arrived offer shares in rental properties with investments starting as low as $100, allowing investors to benefit from rental income without the complexities of property management. Additionally, accredited investors can consider options such as First National Realty Partners, which enables participation in grocery-anchored commercial properties leased by major brands with a minimum investment of $50,000.
Overall, the latest CPI numbers indicate potential stability in the economy, which, combined with the prospect of lower interest rates, may offer both stock and real estate investors a promising outlook moving forward.
