How Should Investors Respond to Inflation, Tariffs, and Housing Market Changes?   - 1st Source

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What this video’s about:

Ever wonder how trade wars and rising prices are impacting your portfolio? In this episode of “The Market Share,” Paul Gifford, Chief Investment Officer for 1st Source Bank, and Matt Noel, Senior Portfolio Manager, discuss key economic trends affecting inflation, tariffs, housing, and asset allocation.

Inflation and Tariffs

First, let’s talk tariffs and how they affect consumer prices and inflation. Matt explains that inflation, as measured by the Consumer Price Index (CPI), has been around 3% recently. He notes, “Over the last 50 years, inflation has averaged about 3.4% annually.” A proposed 10% tariff on imports could add approximately 1% to the current inflation rate, which would be noticeable but not drastic. The U.S. imports total about $3.4 trillion annually, highlighting the significant impact tariffs could have on the economy.

Housing Market Trends

Remember the pandemic? We all spent a lot more time at home. Turns out, that’s fueled a surge in demand for bigger houses. “Adults now spend about an hour and a half more at home each day,” Matt says, which has driven demand for larger homes and contributed to rising prices. This trend has persisted even with higher interest rates, making housing a critical component of inflation.

Asset Allocation and Investment Strategies

With inflation rising, how do you protect your hard-earned money? Paul and Matt discuss how bonds are making a comeback after a decade of low returns.  “With bonds around 5% for corporate bonds, they’re finally providing some return while still offering liquidity and diversification,” he explains. This shift allows investors to earn a real rate of return above inflation, which is crucial for maintaining purchasing power.

Equities also play a vital role in investment strategies, with U.S. companies continuing to innovate and drive growth. Equities will help investors keep up with inflation and generate long-term growth.

Conclusion

This episode of “The Market Share” gives you the inside scoop on the economic forces shaping your world. From tariffs to housing and investment strategies, we’ve got you covered.  Stay informed, make smart decisions, and subscribe to The Market Share for expert guidance on navigating the ever-changing market landscape.

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