Broker Check
Inflation 2023…I’m Down

Inflation 2023…I’m Down

June 26, 2023

“I’m Down” is a song by The Beatles. It was written by Paul McCartney but was credited to the songwriting team of Lennon-McCartney. The song’s style was inspired by Little Richard who had an enormous influence on the lads from Liverpool. It was not included on the album Help but was released as the B-side to the title single, in July 1965.


The song utilizes only three basic chords, and it is the first song from the band that incorporated a Vox Continental electric organ. John Lennon does his best to replicate the style of Jerry Lee Lewis, another early influencer of the group, playing the instrument, with his elbows. 

You tell lies thinking I can't see

You can't cry 'cause you're laughing at me

I'm down (I'm really down)

I'm down (Down on the ground)

I'm down (I'm really down)

How can you laugh when you know I'm down

(How can you laugh) When you know I'm down

The Beatles regularly performed the song during their 1965 and 1966 tours as their closing number, as can be seen in the documentary The Beatles at Shea Stadium from August 1965. The Beastie Boys and Aerosmith, among others, have covered the song. A YouTube link to a live performance is included below.

Just as Paul McCartney frenetically sang of unrequited love in “I’m Down”, we are now watching the Bureau of Labor Statistics Consumer Price Index, CPI, come down nearly as rapidly as it rose the previous year. The May CPI report was released on Tuesday, June 13th, a day before the Federal Reserve Bank decided to pause its interest rate increase campaign. It showed that month over month, inflation rose by .1%. On a year over a year basis inflation came down from 4.9% to 4%, as you can see in the chart below.

The big question for the economy and the Fedis will inflation continue coming down? We believe that the next two months’ reports will show similar drops. This mostly is due to something known as the base effect. I have shared this important concept with you previously.

Remember, the year-over-year inflation numbers are the sum of 12 months of data. With each new report, the oldest number in the series drops off and the most recent month’s data is added. For example, the May ‘23 report added .1% to the rolling 12-month figure. It also dropped off the 1% rise from May ’22 report. This caused the year over year number to drop dramatically. We expect similar base effect drops as the numbers reported from June and July ‘22 drop off the reports over the next two months.

The big question will be what happens after that? There is anecdotal evidence that stickier components of inflation, such as housing and wages, are starting to cool off. Alternative measurements of inflation, which include more current, high-frequency data, are showing inflation at even lower levels than the government is currently reporting.  As you will note in our chart below from Truflation and economist Barry Habib. However, if food or oil prices start to rise again, we could see that feed through to higher prices in the back half of the year.

Source: Barry Habib

“I’m Down” was a fun song from one of the greatest and most influential groups in rock history. Down is also the direction of inflation… for now. The CFPs of Impel Wealth Management will continue to watch the incoming data to determine its future direction and its potential impact on you, our trusted friend, and clients. We wanted to keep you in the loop and give you a song to hum along with as we continue “Moving Life Forward”.

© 2023 Jesse Hurst

The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.