The Markets
This is not the inflation you’re looking for…
In general, everyone who buys goods or services in the United States would prefer to see prices trend lower – and that’s what happened in the earlier part of this year. Over the last couple of months, though, inflation has begun to creep higher.
Last week, the Consumer Price Index (CPI), a well-known measure of inflation, showed prices moving higher in June. The only goods that did not show price increases in June were new and used vehicles. “Even with only limited signs of increasing effects from tariffs, inflation is once again accelerating in America. The total measure of inflation in June was right in line with expectations on Tuesday, but it was still a significant jump in the wrong direction,” reported Megan Leonhardt of Barron’s.
The CPI provides two inflation measures: headline inflation, which shows how all prices changed, and core inflation, which excludes volatile food and energy categories. Here’s a look at how prices have changed this year:
|
Headline Inflation (Y-o-Y) |
Core Inflation (Y-o-Y) |
|
|---|---|---|
| June | 2.7% | 2.9% |
| May | 2.4% | 2.8% |
| April | 2.3% | 2.8% |
| March | 2.4% | 2.8% |
| February | 2.8% | 3.1% |
| January | 3.0% | 3.3% |
Gathering the data for the CPI requires boots on the ground. “Prices are collected each month in 75 urban areas across the country from about 6,000 housing units and approximately 23,000 retail establishments—department stores, supermarkets, hospitals, gas stations, and other types of stores and service establishments,” reported the Bureau of Labor Statistics.
Recently, staff reductions have made it more challenging for the government to complete the monthly inflation survey, reported Matt Grossman of The Wall Street Journal. When hard data is not collected, the staff relies on estimates. In the past, about 10 percent of CPI survey data was estimated, according to economist Torsten Sløk. In May, that number rose to 30 percent – almost one-third of the data in the survey.
Last week, earnings season got off to a good start. John Butters of FactSet anticipates that the Standard & Poor’s 500 Index will report “year-over-year growth in earnings above 9 [percent] for the second quarter.” Strong earnings boosted investor confidence. The Standard & Poor’s 500 Index rose over the week, and the Nasdaq Composite finished at a new record high. However, the Dow Jones Industrial Average ended slightly lower. Yields on shorter maturities of U.S. Treasuries generally moved lower over the week, while yields on longer maturities of U.S. Treasuries moved higher.
| Data as of 7/18/25 | 1-Week | Y-T-D | 1-Year | 3-Year | 5-Year | 10-Year |
|---|---|---|---|---|---|---|
| Standard & Poor's 500 Index | 0.6% | 7.1% | 13.6% | 18.0% | 14.1% | 11.5% |
| Dow Jones Global ex-U.S. Index | 0.4 | 16.1 | 12.2 | 11.4 | 6.4 | 3.6 |
| 10-year Treasury Note (yield only) | 4.4 | N/A | 4.1 | 3.0 | 0.6 | 2.4 |
| Gold (per ounce) | 0.1 | 28.5 | 39.6 | 25.0 | 13.1 | 11.8 |
| Bloomberg Commodity Index | 1.2 | 6.4 | 6.2 | -3.5 | 9.7 | 0.9 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
About Money and Happiness
In 2010, Nobel Laureates Daniel Kahneman and Sir Angus Deaton investigated how money influences happiness. They measured as people’s daily sense of emotional well-being and their lifetime sense of accomplishment as proxies for happiness. The pair concluded that, “More money does not necessarily buy more happiness, but less money is associated with emotional pain.” In addition, the emotional benefits of earning more money leveled off when income reached $75,000. (The real median income in the United States was about $66,700 in 2010, according to the U.S. Census Bureau via FRED.)
In 2021, the relationship between money and happiness was revisited by Matthew Killingsworth, a senior fellow at the Wharton School. The study found, “Larger incomes were robustly associated with both greater experienced well-being and greater evaluative well-being… There was no observed plateau in experienced well-being… either around $75,000/y or at any other income level.” (The real median household income in the U.S. was about $79,200 in 2021, according to the U.S. Census Bureau via FRED.)
To try and understand the contradiction in findings, Kahneman and Killingsworth engaged in an adversarial collaboration mediated by Wharton professor Barbara Mellers. After reviewing the data sets, they concluded, “In the low range of incomes, unhappy people gain more from increased income than happier people do. In other words, the bottom of the happiness distribution rises much faster than the top in that range of incomes. The trend is reversed for higher incomes, where very happy people gain much more from increased income than unhappy people do.”
Weekly Focus – Think About It
“Research is formalized curiosity. It is poking and prying with a purpose.”
—Zora Neale Hurston, Writer and anthropologist
Wishing you and your families well,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management
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- Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
- Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
- The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
- All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
- The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
- The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
- Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
- The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
- The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
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Sources:
https://www.bls.gov/news.release/archives/cpi_06112025.htm; https://www.bls.gov/news.release/archives/cpi_05132025.htm; https://www.bls.gov/news.release/archives/cpi_04102025.htm; https://www.bls.gov/news.release/archives/cpi_03122025.htm;
https://www.bls.gov/news.release/archives/cpi_02122025.htm
https://www.bls.gov/news.release/cpi.nr0.htm
https://www.barrons.com/livecoverage/cpi-inflation-report-june-data-release-today or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/07-21-25-Barrons-Inflation-is-on-the-Rise%20-%203.pdf
https://www.investopedia.com/terms/h/headline-inflation.asp
https://www.bls.gov/opub/hom/cpi/design.htm
https://www.wsj.com/economy/cpi-inflation-data-accuracy-8bd2a8ae or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/07-21-25-WSJ-Economists-Raise-Questions%20-%206.pdf
https://www.apolloacademy.com/cpi-data-quality-declining/#:
https://insight.factset.com/sp-500-will-likely-report-earnings-growth-above-9-for-q2
https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/07-21-25-Barrons-DJIA-S&P-Nasdaq%20-%209.pdf
https://www.pnas.org/doi/full/10.1073/pnas.1011492107#sec-1
https://fred.stlouisfed.org/series/MEHOINUSA672N
https://www.pnas.org/doi/full/10.1073/pnas.2016976118#sec-1
https://www.pnas.org/doi/10.1073/pnas.2208661120
https://www.goodreads.com/quotes/49307-research-is-formalized-curiosity-it-is-poking-and-prying-with
ADV & Investment Objectives: Please contact The Dowling Group if there are any changes in your financial situation or investment objectives, or if you wish to impose, add or modify any reasonable restrictions to the management of your account. Our current disclosure statement is set forth on Part II of Form ADV and is available for your review upon request.
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