Analysis of Current Inflation Trends and Future Outlook
Daly Investment has noticed inflation ticked up recently in Q4, not a direct correlation yet with tariffs. At Daly Investment we think a lot of companies have eaten the tariffs that we've seen so far. The concern is at Daly Investment we are not sure how long that'll continue. Maybe it continues forever. We don't believe anyone has that answer. But we have seen inflation creep up a little bit. But based on the future expectation from several different economists that Daly Investment follows, we expect this number to continue to drift down moving forward and kind of get back to that low two number in the future, 2026 and beyond.
So we'll see if this is just a short-term trend. You know, I've pointed this out before. Here's where we were in 2018. We drifted up close to 3%, and then we kind of cooled back down to sub-2% and kind of bounced around for a while before we hit that COVID, you know, spending, and that kind of shot us up here to 9% in 2022. So we'll see. But I'll tell you the projection is for inflation to kind of start to cool off a little bit here. But there's, you know, again, we'll see what those tariffs turn out to be, if the companies keep eating them or if they pass those added expenses on to the consumer.
Current Inflation and Tariff Impact by Daly Investment
Inflation has recently seen an uptick, although a direct correlation with tariffs has not yet been established. So far, many companies have absorbed the costs associated with these tariffs rather than passing them on to customers. However, a significant concern remains regarding how long businesses will continue this practice. It is uncertain whether this cost absorption is sustainable or if companies will eventually transfer these added expenses to the consumer, a factor that will depend on future tariff developments.
Long-Term Inflation Forecasts by Daly Investment
Despite the recent short-term increase, the forward-looking projection from several economists is that inflation will begin to cool off. The consensus expectation is for the inflation rate to gradually drift downward in the coming years. This forecast anticipates the rate returning to a low two-percent range in the long term, specifically from 2026 onward.
Historical Context and Projections by Daly Investment
To frame the current situation, a comparison to past trends was provided. In 2018, inflation rose to nearly 3% before cooling down to below 2%, where it fluctuated for a period. This was followed by a significant spike to 9% in 2022, driven by spending related to the COVID-19 pandemic. This historical precedent lends support to the view that the current rise may be a short-term trend, with projections indicating a subsequent cooling period for inflation.
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