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Inflation Records Biggest Drop In Almost 3 Years



Key Takeaways

  • Inflation fell in December, with the overall Consumer Price Index (CPI) falling 0.1% for the month.
  • It’s the biggest reduction since April 2020, and brings the annual rate of inflation own to 6.5%, from 7.1% last month.
  • The biggest driver of the reduction was lower fuel and gasoline prices, which were down double digits. It’s not all good news though. Eggs were up 11.1%.

Every month, half the country waits with bated breath to see what the latest inflation figure is going to be. Ok, that might be a slight exaggeration, but still, what a time to be alive. Who would have thought that the average person would be so interested in the increase in the price of soybeans and floor coverings.

But here we are.

And while we’re used to seeing the words “all time high” repeated over and over again with every inflation announcement, it looks like the dominoes are finally starting to tumble.

Because this month, prices went down. Yes, actually down. It’s not that they went up less than December last year, meaning the annual rate is now lower. The average prices for things are actually lower than they were in November.

Before we go getting ahead of ourselves, we’re talking about a decrease of 0.1%. So it’s probably not the time to be cracking open the champagne and ordering the prime rib, but nevertheless, its progress.


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Inflation falls 0.1% in December

The headline rate of inflation snuck down 0.1% in December, which means the annual rate is down to 6.5%. That’s still high, but we’re seeing some real movement in the annual headline figure now, which was still at 7.1% last month.

One of the biggest drivers for the drop has been a significant fall in the cost for gasoline (-9.4%) and other fuel oils (-11.9%). It means a significant decrease in the prices at the gas station for drivers, which will be a relief that will surely help households.

There were plenty of other areas that saw big sizable reductions as well. As is always the case with the inflation figures, the items are pretty random. The price of bacon went down 2.9%, fresh fruits were 1.9% cheaper than the month before, mens underwear and swimwear dropped 1.4% and womens dresses were 2.4% lower.

Wardrobes were real winners in December as mens shoes also went down 2.4%, womens footwear was down 0.6%, as was womens underwear (-0.7%) and watches (-0.1%).

Used cars and trucks fell further (-2.5%) which is good news for those in the market for some new wheels, but not great news for companies like Carvana. Vehicle parts and equipment other than tires went down 1.2%.

Non-prescription drug prices fell 0.4%, audio equipment was down 2.4%, health insurance dropped a surprising 3.4%, car and truck rentals fell by 1.6% and accounting fees went down 3.5%.

You get the picture, lots of stuff got cheaper. But not everything.

While overall prices were down, there were many items that continued to get more expensive through December. Some notable outliers were eggs, which went up by 11.1%, meaning overall your eggs and bacon breakfast is still going to cost you more.

Thinking of a sweet option to start the day instead? Well sweet rolls, coffeecakes and doughnuts were up 2.6% as well. Tomatoes went up 3.4%, lettuce was up 4%, dried beans and peas were 3.2% more expensive and butte went up 3.3%.

All in all, you shouldn’t expect to see any major difference to your weekly grocery shop just yet, but it’s progress.

Core CPI, which strips out the volatile food and energy sectors, went up by 0.3%, which was in line with expectations. It puts the annual headline rate at 5.7%, which is down from the 6% recorded last month.

How did the markets react?

They ignored it, pretty much. That’s not really a surprise, given that this month’s figures were basically bang in line with analysts’ projections. The S&P 500 was broadly flat in opening hours trade, and Treasury yields have decreased slightly.

Information from the bond markets now suggests that the Fed will look to implement an interest rate hike of 0.25 percentage points at their next meeting on February 1st. This marks a swift come down from their record increase, which saw rates upped by 0.75 percentage points four times in a row last year.

At the last meeting in December, this was moderated somewhat with a hike of 0.5 percentage points.

The Fed has made it clear that they will do whatever they need to do in order to bring inflation back down to the target rate of 2-3%, but chairman Jerome Powell has stated that they hope to be able to do this without a hard landing for the economy.

How can investors navigate ongoing high inflation?

The trend is in the right direction, but inflation isn’t likely to come back down into the target range for a while. There are a number of different asset classes that investors can look to in order to provide them with some protection against inflation. Some examples include:

Treasury Inflation Protected Securities

TIPS, or Treasury Inflation-Protected Securities, are a type of bond issued by the U.S. government. They are similar to other bonds, but they have an added feature to protect your investment from inflation.

When you invest in TIPS, the value of your bond will increase with inflation. So, even though you may have bought the bond for a certain amount of money, by the time it matures, it will be worth more in terms of buying power.

The interest payments on TIPS are also increased to keep up with inflation. This means that your investment’s value will not decrease as much as it would with regular bonds.

Gold and Precious Metals

Precious metals have been considered a hedge against inflation and a store of wealth for literally thousands of years. Even today, gold in particular is seen as a ‘safe haven’ asset, and often performs well during times of economic crisis.

These days gold investments are usually made through the use of ETFs and commodity based funds, but some die hard gold bugs still hold gold investments the old fashioned way.

Real Estate

Property is another asset which has traditionally been considered a solid hedge against inflation. The income from the rental payments will generally rise at the rate of inflation, and can go up above the rate of inflation during certain time periods.

By extension, the capital value of a property can go up above inflation over the long term as well. Because property is more illiquid than other assets like stocks, panic selling and large swings in the values are less common.

That’s not to say they don’t happen, as we saw in 2008.


Commodities are goods like oil, wheat, wool, cotton and copper. These are raw materials that we use to create the goods and products that we consume and use every day. They can be a really good hedge against inflation, because the change in the price of commodities is often what’s driving inflation in the first place!

You might not want to keep a flock of sheep or a field of wheat handy, but these days there are a variety of investment vehicles that allow speculation in the commodity assets, without having to take delivery of 4,000 barrels of crude oil.

How to invest in inflation hedged assets

If you don’t want to go out and piece together an inflation hedged portfolio yourself, we’ve got you covered. At, we harness the power of AI to help keep your assets rising with prices with our Inflation Protection Kit.

This Kit invests in a mix of TIPS, precious metals and a basket of commodities. Each week, our AI predicts how these different assets are likely to perform on a risk-adjusted basis, and then automatically rebalances the portfolio according to the predictions.

Want to focus just on precious metals? Our Precious Metals Kit uses AI in the same way, but targets its strategy towards metals based ETFs that invest in a range of different shiny things including gold, silver, platinum and palladium.

Download today for access to AI-powered investment strategies.


Bonds See 2023 Recession, Stocks Aren’t So Sure



The yield curve is one of the most robust recession predictors and has signaled a recession may be coming since mid 2022. In contrast, U.S. stocks as measured by the S&P 500 are up materially from the lows of last October and only just below year-to-date highs, seemingly rejecting recession fears. Yet, fixed income markets see the Fed potentially cutting rates by the summer, perhaps reacting to a U.S. recession.

The Evidence From The Bond Markets

The recessionary evidence, at least from fixed income markets, is mounting. The 10 yield Treasury yield has been below the 2 year yield consistently since last July. That is is called an inverted yield curve and has signaled a recession fairly reliably when compared to other leading indicators.

Building on that, fixed income markets see almost a nine in ten chance that the Federal Reserve cuts rates by September of this year. That’s something the Fed has repeatedly said they won’t do on their current forecasts. Yet, a recession could cause it to happen.

The Stock Market

In contrast, the stock market shows some optimism. The S&P 500 is up 7% year-to-date as the market has shrugged off fears of contagion from recent banking issues. In particular, tech stocks have rallied.

In contrast, more defensive sectors such as healthcare, utilities and consumer goods have lagged in 2023. This suggests that the stock market is taking more of a ‘risk on’ position and is perhaps less worried about the economy.


That said the stock market is a leading indicator of the business cycle, it may be that stocks see a recession, but are now looking past it to growth ahead and are factoring in the lower discount rates that a recession might bring as interest rates decline. Also, the U.S. stock market is relatively global, so the fate of the U.S. economy is a key factor in driving profits, but not the only one.

What’s Next?

Monitoring unemployment data will be key. Though the yield curve is a good long-term forecaster of recessions it is less precise in signaling when a recession starts. Unemployment rates can offer more accurate recession timing. Unemployment edged up in February, suggesting a recession may be near, but we’ve also seen monthly noise unemployment. Two similar monthly unemployment spikes during 2022 both proved false alarms.

However, if we see a sustained move up in unemployment from the low levels of 2022 that may be a relatively clear sign that a recession is here. Economist Claudia Sahm estimates that a sustained 0.5% increase in unemployment rate from 12-month lows is sufficient to trigger a recession. Unemployment rose 0.2% from January to February 2023, so maybe we’re on the way there. Of course, the jobs market performed better than expected in 2022 and it could do so again. Still, fixed income markets do suggest a 2023 recession is coming. Stock markets don’t necessarily share that view.

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Which States Have The Highest And Lowest Life Expectancies?



There’s a wide variance of life expectancies among the 50 states in the U.S., according to a recent report prepared by Assurance, an insurance technology platform that helps consumers with decisions related to insurance and financial well-being.

Figure 1 below shows the 10 states with the highest life expectancy, starting with Hawaii, the state with the highest life expectancy.

Figure 2 below shows the 10 states with the lowest life expectancy, starting with Mississippi, the state with the lowest life expectancy.

Assurance scoured life expectancy data prepared in January 2023 by the U.S. Centers for Disease Control and Prevention (CDC). With this data, Assurance created several easy-to-understand graphics that offer information about life expectancies.

Life expectancies are a basic measure of well-being

As measured by the CDC, life expectancies are a basic measurement of well-being in a broad population and not a prediction of how long an individual might live. The CDC measures the expected lifespan for a person born in the year of measurement. This measurement is calculated based on the assumption that the individual will live and die according to the rates of death that are prevalent in the measurement year for each age. There’s no assumed improvement or backsliding in the assumed mortality rates in future years for each age in the life expectancy calculation.


By contrast, an estimated lifespan for an individual would consider their current age, their gender, and some basic lifestyle information. It might also attempt to project future improvements or backsliding in mortality rates based on key factors.

Significant influences on life expectancy calculations

Leading causes of death in the U.S. are heart disease, cancer, and accidents in that order. These immediate causes are significantly influenced by factors in the population such as poverty rates, educational attainment, rates of obesity and smoking, access to healthcare, prevalence of violent crime, and the support people receive from federal, state, and local governments. All these factors can vary widely among different states, which can be a key reason why life expectancies vary by state.

When you think about it, all these factors also have the potential to influence a person’s quality of life. The measured life expectancy rate rolls up all these factors into one objective measurement of well-being that’s based on population data.

In addition to the factors listed above, mortality rates increased and life expectancies decreased in the past few years due to the Covid-19 pandemic. A recent article titled “Live Free And Die” summarized recent research results that show that life expectancies in most countries around the world rebounded after the Covid-19 pandemic but that they continued to decline in the United States. Many of the reasons cited in the article for the continued decline in U.S. life expectancies are the same or similar to the factors listed above.

NPR‘Live free and die?’ The sad state of U.S. life expectancy

Why should retirees care about the life expectancies reported here if these measures don’t predict your own lifespan? Life expectancy calculations indicate the general well-being of the entire population in your area. While the living conditions in your area can influence your own lifespan and quality of life, retirees should focus on their remaining life expectancy given their age. They should also consider how the factors listed above that influence life expectancies in the population might apply to them.

You can obtain customized estimates of your remaining life expectancy at the Actuaries Longevity Illustrator. Part of your planning for retirement is understanding how long you an an individual might live, instead of relying on generalized information about larger populations you see in the media.

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IRS Dirty Dozen Campaign Warns Taxpayers To Avoid Offer In Compromise ‘Mills’



Owing taxes can be stressful. Unfortunately, the actions of some companies can make it worse. As part of its “Dirty Dozen” campaign, the IRS has renewed a warning about so-called Offer in Compromise “mills” that often mislead taxpayers into believing they can settle a tax debt for pennies on the dollar—while the companies collective excessive fees.

Dirty Dozen

The “Dirty Dozen” is an annual list of common scams taxpayers may encounter. Many of these schemes peak during tax filing season as people prepare their returns or hire someone to help with their taxes. The schemes put taxpayers and tax professionals at risk of losing money, personal information, data, and more.

(You can read about other schemes on the list this year—including aggressive ERC grabs here, phishing/smishing scams here and charitable ploys here.)

Tax Debt Resolution Schemes

“Too often, we see some unscrupulous promoters mislead taxpayers into thinking they can magically get rid of a tax debt,” said IRS Commissioner Danny Werfel.

“This is a legitimate IRS program, but there are specific requirements for people to qualify. People desperate for help can make a costly mistake if they clearly don’t qualify for the program. Before using an aggressive promoter, we encourage people to review readily available IRS resources to help resolve a tax debt on their own without facing hefty fees.”


Offers In Compromise

Legitimate is a key word. Offers in Compromise are an important program to help people who can’t pay to settle their federal tax debts. But, as the IRS notes, these “mills” can aggressively promote Offers in Compromise—OIC—in misleading ways to people who don’t meet the qualifications, frequently costing taxpayers thousands of dollars.

An OIC allows you to resolve your tax obligations for less than the total amount you owe. You generally submit an OIC because you don’t believe you owe the tax, you can’t pay the tax, or
 exceptional circumstances exist.

Because of the nature of the OIC—and the dollars involved—the process can be time-consuming. It can also be confusing for taxpayers who may not have a complete grasp on their finances.

First, you must complete a detailed application, Form 656, Offer in Compromise. You must also submit Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-B, Collection Information Statement for Businesses, with supporting documentation (generally, bank and brokerage statements and proof of expenses).

You’ll also need to submit a non-refundable fee of $205 and payment made in good faith. The payment is typically 20% of the offer amount for a lump sum cash offer or the first month’s payment for those made over time. Generally, initial payments will not be returned but will be applied to your tax debt if your offer is not accepted. Payments and fees may be waived if the OIC is submitted based solely on the premise that you do not owe the tax or if your total monthly income falls at or below income levels based on the Department of Health and Human Services (DHSS) poverty guidelines.

The IRS will examine your application and decide whether to accept it based on many things, including the total amount due and the time remaining to collect under the statute of limitations. The IRS will also review your income—including future earnings and accounts receivables—and your reasonable expenses, as determined by their formula. The IRS will also consider the amount of equity you have in assets that you own—this would include real property, personal property (like automobiles), and bank accounts.


Before your offer can be considered, you must be compliant. That means you must have filed all your tax returns and paid off any liabilities not subject to the OIC. After you submit your offer, you must continue to timely file your tax returns, and pay all required tax, including estimated tax payments. If you don’t, the IRS will return your offer.

Additionally, you cannot currently be in an open bankruptcy proceeding, and you must resolve any open audit or outstanding innocent spouse claim issues before you submit an offer.


You can probably tell—it’s a lot to consider. You may want representation. A tax professional can help marshal you through the process and offer practical guidance, while communicating what fees could look like.

By contrast, according to the IRS, an OIC “mill” will usually make outlandish claims, frequently in radio and TV ads, about how they can settle a person’s tax debt for cheap. Also telling: the fees tend to be significant in exchange for very little work.

Those mills also knowingly advise indebted taxpayers to file an OIC application even though the promoters know the person will not qualify, costing taxpayers money and time. You can check your eligibility for free using the IRS’s Offer in Compromise Pre-Qualifier tool.

“Pennies On A Dollar”

What about those promises that taxpayers can routinely settle for pennies on a dollar? Not true. Generally, the IRS will not accept an offer if they believe you can pay your tax debt in full through an installment agreement or equity in assets, including your home. That’s why the IRS tends to reject a majority of OICs that are submitted. The acceptance rate is less than 1 in 3, according to the 2021 Data Book.

The IRS will generally approve an OIC when the amount offered represents the best opportunity for the IRS to collect the debt. It’s true that there’s a formula that the IRS uses to figure out how much they think they can collect from you. But there is some wiggle room to account for special circumstances, including a loss of income or a medical condition. It’s worth noting those are the exceptions, not the rule.


While submitting an OIC may keep the IRS from calling you, it doesn’t stop all collections activities—don’t believe companies that suggest that submitting an OIC will make your tax debt disappear. Penalties and interest will continue to accrue on your outstanding tax liability. Additionally, the IRS may keep your tax refund, including interest, through the date the IRS accepts your OIC.

You may also be liened. In most cases, the IRS will file a Notice of Federal Tax Lien to protect their interests, and the lien will generally stay in place until your tax obligation is satisfied.

Be Skeptical

An OIC is a serious effort to resolve tax debt and shouldn’t be taken lightly. Be skeptical—if it sounds too good to be true, it likely is. If you’re considering an OIC, hire a competent tax professional who understands the rules and is willing to level with you about your chances of being successful—including other options. Don’t fall into a trap that can make your situation worse.

MORE FROM FORBESIRS Urges Those Hoping To Help To Beware Of Scammers Using Fake Charities

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