In a recent television appearance, Bullseye American Ingenuity Fund portfolio manager Adam Johnson said he sees broader inflation drifting lower, a view that could shape investor expectations for growth, earnings, and interest rates. Speaking on a business news program, Johnson outlined the case for cooling price pressures in the months ahead and discussed what it could mean for markets and policy.
Where Inflation Stands Now
Price growth has slowed from the 40-year highs reached in 2022, when supply chain snarls and energy shocks pushed up costs across the economy. Through 2023 and into 2024, headline inflation eased as goods prices retreated and shipping backlogs cleared. The tougher problem has been services, where rent, insurance, and healthcare kept pressure on core measures that exclude food and energy.
Johnson’s view aligns with the idea that the worst of the spike is over. He pointed to factors such as easing goods prices, improved supply lines, and slower wage gains as reasons why broader measures should continue to moderate. Many investors are also watching shelter inflation, which tends to lag private rent data by several months and could weigh less on official indexes later this year.
Reading the Gauges: CPI, PCE, and More
Two key reports guide markets and the Federal Reserve. The Consumer Price Index tracks what households pay. The Personal Consumption Expenditures index, which the Fed prefers, gives a broader read of spending. Core versions of both strip out food and energy to reduce month-to-month swings.
Analysts also track “supercore” services, which remove shelter to capture labor-driven prices. Johnson suggested that as hiring cools and productivity improves, wage-sensitive categories could ease. That would support a slower trend in underlying inflation, even if headline readings bump around on fuel or food costs.
What Could Push Prices Lower
Several forces could steer inflation to a softer path. Shipping rates have normalized after spikes during the pandemic. Business inventories are healthier, reducing rush orders and premiums. Technology spending is lifting output per worker in some sectors, which can help companies hold prices steady.
- Easing rent growth in new leases could feed into official shelter data with a lag.
- Wage growth has cooled from its peak as labor supply improves.
- Global goods prices, including used cars and electronics, show less pressure than in 2021–2022.
Risks and Counterarguments
Not everyone agrees that a clear downtrend is locked in. Services inflation can be sticky, especially in categories tied to healthcare and insurance. Energy price shocks, weather events, or new trade frictions could lift costs again. If productivity gains fade or hiring reaccelerates, wage pressures could return.
Some economists warn that strong consumer spending can slow the pace of disinflation. If households keep drawing on savings or credit, companies may find room to raise prices. There is also the risk that housing data cools more slowly than private rent trackers suggest, leaving core inflation higher for longer.
Market and Policy Implications
Expectations for lower inflation matter for interest rates. If core measures trend down, the Federal Reserve could shift from holding rates steady to easing. That would lift interest-sensitive sectors like housing and small-cap stocks. Johnson argued that cooling inflation, paired with steady growth, supports a constructive backdrop for equities.
Bond markets would also react. A softer inflation path tends to pull long-term yields lower, boosting prices of Treasurys and investment-grade debt. Credit markets could firm if borrowing costs fall and default risks remain contained.
What to Watch Next
Investors are focused on three signposts: monthly core inflation prints, the shelter contribution to those readings, and wage growth in payroll data. If all three continue to ease, Johnson’s thesis gains support. If services inflation stalls or energy spikes, the path becomes bumpy.
Corporate earnings calls offer added clues. Mentions of freight costs, discounting, and pricing power help show whether companies feel confident about margins without raising prices. Consumer surveys on inflation expectations, which can shape behavior, are also key.
Johnson’s case for a cooler inflation trend rests on improving supply dynamics, slower wages, and a turn in shelter. The countercase points to sticky services and fresh shocks. The next few data releases will test which story holds. For now, markets will weigh each report for signs that price pressures are finally on a steadier glide path.
