The Weekly Update 3/6/2026™

What Does This Mean?

In the February Edition of The Seven Signs of a Changing Economy™, under Sign #7, I made special note that per Truflation, (a source I know and trust), the U.S. Consumer Price Index (CPI) was resting at +.86% (Read it Here).

This is well below the Federal Reserve’s self-imposed target of 2% CPI.  More importantly, inflation has continued its downward trend to just +.68% as of 2-9-2026.  Truflation is “real time” data collection versus the Bureau of Economic Analysis (BEA) 1950’s style of data collecting i.e., a 1½ - 2-year lag on the largest input, which is housing, at nearly 40% of CPI.

What does this mean?

To me, it means, as U.S Fed Chairman Powell exits, and Mr. Warsh gets settled in, we are likely to see interest rates drop.  Per the chart below, sourced from Fundstart, even the Fed’s CPI at 2.52% is back to pre-Covid levels in 2019.

Observe in this chart that back in 2019 the Fed Funds interest rate was +2.10% versus today’s 3.50% - 3.75%.  This is crazy as the Fed Funds rate should be more like it was in 2019 at approximately 2.10%.  This suggests we are standing right in front of what could potentially be 7 interest rate cuts in 2026, starting as early as July 2026.

Reducing interest rates should goose housing sales, both existing and new.  Reducing interest rates has historically been a significant driver of high valuations for the values of Corporate America as measured by the S&P 500.

If this happens, as I believe it will, it should make all our piggy bank portfolio valuations trend higher.

I did not say market valuations go straight up, and I did not say without volatility, yet the data flow suggests the good old USA has a very bright outlook.  Think “Five Year Money” (Read it Here).

As always, I am interested in your thoughts, comments, and questions.

Respectfully,

James O. Lunney, CFP®

CERTIFIED FINANCIAL PLANNER™ Professional  

*The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.  Investing involves risk. Loss, including loss of principal, may occur. No strategy assures success or protects against loss. All performance referenced is historical and is no guarantee of future results.  All indices are unmanaged and may not be invested into directly.

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