Vice President Kamala Harris paid the price for Americans paying high prices.
Or at least higher prices.
According to a CBS News exit poll from yesterday’s election, a notable 45 percent of respondents said they were worse off financially compared to four years ago, and eight in 10 of those voters said they backed former President Donald Trump. Most of those respondents said inflation was a particular hardship, including 22 percent who described it as being “severe.”
And while everyday prices are certainly higher than they were prior to the pandemic, the annual inflation rate in the US (as measured by the CPI) has actually been declining since hitting a peak of 9.1 percent in June 2022. In September 2024, for example, the CPI slowed for a sixth consecutive month to 2.4 percent, down from 2.5 percent in August.
Nevertheless, despite the downward trend in prices, the American electorate still continues to suffer from sticker shock and ultimately blamed the Biden administration for it on Election Day.
All that said (and it admittedly was a lot), it remains to be seen whether the inflation dragon has truly been slain. The Federal Reserve seemingly claimed victory over inflation in September when it cut interest rates by 50 basis points. Moreover, they are expected to lower them again this week by another quarter of a percent.
Still, maybe they shouldn't move so quickly. Since the Fed’s big move, the 10-Year Treasury yield has surged to 4.45 percent from 3.6 percent, including a massive post-Election Day spike, signaling to investors that inflation protection should not be forgotten just yet.
Tim Bartlett, senior portfolio manager at Unique Wealth, for example, said the best hedge for inflation is equities, so having a higher exposure to stocks will accomplish that goal. He adds that investment in private credit will be a great hedge against inflation as well, even if the Fed is forced to reverse course and raise rates again.
Elsewhere, Geoff Schaefer, financial planner and wealth advisor at Intergy Private Wealth, said owning companies has been, and continues to be, the best way to outpace inflation over time.
“While stock ownership is not a direct hedge, because stocks can go down while inflation goes up, it is a long-term hedge when you compare the purchasing power of what an investment in a stock can do over 20 years compared to bonds, gold, cash, or other opportunities,” Schaefer said.
Likewise, Mark Rich, director of investments at Procyon Partners, continues to view equities as the best hedge against inflation over the long term. In his view, shorter term inflation hedging strategies can include precious metals and other commodities, as well as inflation protected bonds.
“We do not view inflation as a main issue in the market today, but would position investors with an overweight to high quality companies with strong balance sheets and a shorter duration profile at a time where inflation was a concern,” Rich said.
Finally, Bobby Jones, managing director at Americana Partners, points out that while inflation has come down over the past year, it remains persistently above the Federal Reserve’s target of 2 percent.
“During this inflationary period, we moved assets away from traditional bonds and increased our allocation to equities, which serve as a great long-term inflation hedge. We also shifted into private credit, where many of the underlying loans are floating rate,” Jones said.
Jones also mixes in a healthy allocation to real estate but focuses on triple net leases, where the underlying tenant is responsible for most of the expenses.
“Many of these properties are long-term leases with annual built-in rent increases,” Jones said.
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