Falling Inflation in 2023 Mirrors Past Drops That Kicked Off Long Bull Markets

• Inflation, as measured by the Consumer Price Index (CPI), dropped significantly in 2023 after peaking in 2022. Comparable CPI drops happened in 2009 and 1982.

• Those CPI drops in 2009 and 1982 marked the start of long bull markets for stocks. The Fed lowered interest rates both times.

• Experts predict inflation will keep dropping in 2024, allowing the Fed to cut interest rates further.

• Falling rates combined with lower inflation tends to benefit growth stocks and risk assets like stocks.

• The S&P 500 gained 24.2% in 2023 on the CPI drop. If inflation keeps falling, it could mark the start of another multi-year bull market.