Upticks: Is Inflation Cooling? The Data, Caveats and Next Moves
By Luke Sullivan on December 24, 2025
Explore this inflation debate with Jake and Cory as they break down CPI, personal cost-of-living realities, Fed policy, and market consolidation. Discover what “cooling” inflation really means—plus listener questions on future Fed leadership and more.
Click here to subscribe to our newsletter!
Click here for your complimentary ‘Retiring Right’ ebook
Read an overview of the conversation below
Understanding Inflation—Beyond the Headlines
Inflation is a complex phenomenon, often reduced to headline numbers like CPI or PPI. As Jake notes, “After months of stubborn price increases, recent reports suggest inflation may be easing. But is the story that simple?”. While the current rate hovers around 2.7%, down from a peak near 9%, these figures don’t always reflect the reality for everyday consumers. The Consumer Price Index (CPI) is a broad measure, but individual experiences vary widely. For example, Cory points out, “CPI is not representative of the cost of living. Everyone has their own personal inflation number.”
This disconnect between official statistics and lived experience is important. Diapers, health insurance, and housing costs may rise faster than the average, impacting families differently. “If the price of diapers triples on Cory, that impacts his inflation number, where I could care less right now what diapers cost,” Jake explains.
Headline inflation numbers can mask underlying trends. While gas and electronics may be cheaper, essentials like housing and insurance continue to climb. “Housing is up big, health insurance costs are up big. That should matter to all of us,” Cory emphasizes.
The Myth of “Cooling” Inflation
A common misconception is that “cooling” inflation means prices are dropping. Jake clarifies, “Inflation cooling does not mean prices are going to drop. It means prices are increasing slower than they were three years ago. But they are still going up.” This distinction is vital for retirees and investors. Even as inflation slows, the cumulative effect means goods and services remain more expensive than in previous years.
Deflation, or falling prices, is rare and often signals economic trouble. “Deflation is worse than inflation,” Jake argues. “If housing got cheaper right now, I would say that would be bad. If health insurance got cheaper, I would suggest that would be bad.” Deflation can freeze economic activity, leading to stagnation and potential crises. Cory counters that lower housing costs could free up budgets for other spending, but Jake maintains that planning is key: “Don’t bite off more than you can chew. Live within your plan.”
Ultimately, the goal is to maintain purchasing power and financial stability. Asset allocation plays a critical role. “Stocks are there to help you when we have inflationary times,” Jake notes, while cautioning against overexposure. Diversification remains a cornerstone of financial planning.
The Fed’s Role and Interest Rate Policy
The Federal Reserve’s approach to inflation is a frequent topic of debate. The Fed targets a 2% inflation rate, but Cory questions this goal: “Their target should be 0%. 0% inflation.” The Fed’s actual mandate is stable prices, but hitting this target has proven elusive.
Interest rate decisions impact everything from mortgage rates to investment returns. Jake defends current Fed Chair Jerome Powell: “We didn’t get into a prolonged recession. Inflation has cooled from 9% to 2.7%. And unemployment has stayed under 5%.” Cory, however, points to concerns about quantitative easing and the Fed’s balance sheet. The debate highlights the complexity of monetary policy and its ripple effects on the economy.
Looking ahead, potential candidates for Fed Chair bring varied philosophies. Kevin Hassett, Kevin Warsh, Christopher Waller, and Rick Rieder each offer different approaches to rate cuts and market stability. Cory suggests Thomas Hoenig, known for caution on ultra-low rates, as an ideal choice for retirees. The selection will shape future policy and, by extension, the economic landscape for all of us.
Market Consolidation and Consumer Impact
Industry consolidation is another driver of inflation. Jake observes, “Companies are in business to make money to raise profits, they’re going to charge what they can. As there’s been all kinds of consolidation in all different industries, people have pushed prices higher.” Fewer competitors mean less pressure to lower prices, affecting sectors from insurance to housing and streaming services.
Jake adds, “The way to solve the housing prices is for home builders to build. Increase supply. If there’s more options, they have to be more competitive.” Competition is essential for keeping costs in check. The same logic applies to health and homeowners’ insurance, where more providers could drive down rates.
Government intervention, such as breaking up monopolies, is sometimes necessary. “The government should be quicker to bust up these monopolies,” Cory argues. The recent example of Netflix’s potential acquisition of major studios illustrates how consolidation can lead to higher prices for consumers.
Planning for the Future—Retirement and Legacy
Effective financial planning means preparing for inflation’s long-term effects. “If you have a million dollars today, 30 years from now, it’s not going to be a million dollars in today’s terms,” Jake reminds listeners. Retirees should diversify their portfolios to help protect against rising costs and market volatility.
Jake and Cory emphasize the importance of cash flow and legacy planning. “Our specialty is turning a nest egg into an income stream and making sure our clients don’t run out of it,” Jake says. The process, developed at the Wharton School, has proven resilient through market cycles. Clients are encouraged to review their plans regularly and adjust for changing circumstances.
Charitable giving and legacy support are also discussed, with examples like Michael Dell’s $6.25 billion pledge. Cory notes, “Large donors give six billion. They’re not just giving for the deduction. It’s really a matter of what happens from here.” The key is to align giving with personal values and financial goals, rather than focusing solely on tax benefits.
Thank you for tuning in, we hope you have a great week!
