Why Stocks Can Rise While Living Costs Stay High: Earnings, Inflation and Interest Rates

Why can stocks perform well when household expenses remain elevated? Corporate earnings and everyday living costs capture different parts of the economy. In this Financial Forecast conversation, Tim Fitzwilliams examines corporate profits, inflation, Federal Reserve policy, economic growth, and Treasury yields as separate but related indicators.

Corporate earnings and stock-market performance

Companies’ reported earnings can influence investor expectations and stock prices. Strong earnings figures, however, do not necessarily mean consumers experience lower food, energy, or housing costs. Market performance and household purchasing power can diverge.

Inflation measures and everyday costs

Tim addresses why food and energy remain visible sources of pressure for consumers. He also discusses CPI and PCE in the context of inflation tracking. These measures differ in construction and weighting. Importantly, headline PCE includes food and energy, while core PCE excludes those categories. No single measure fully describes every household’s experience.

Fed policy, growth, and mortgage rates

Inflation and GDP growth can influence discussion of Federal Reserve policy, but interest-rate decisions are uncertain. Mortgage rates are also affected by Treasury yields, bond-market conditions, and other factors, so a change in the Fed’s policy rate does not automatically produce an equivalent change in a mortgage quote.

A broader planning perspective

Financial decisions may benefit from considering several indicators alongside individual goals and time horizons rather than relying on one market headline. The discussion provides educational context, not a prediction or personalized recommendation.

Recorded 09/01/2026. Economic data and opinions reflect information available at that time and may have changed. This segment is historical commentary, not a current forecast.

For clarification, core PCE excludes food and energy; headline PCE includes both. Declining inflation means prices are increasing more slowly and does not necessarily mean prices are falling. Federal Reserve policy changes do not translate directly into equivalent changes in mortgage rates.

Fitzwilliams Wealth Management, Inc. is an SEC registered investment advisor. FWM and Fitzwilliams Financial are affiliated companies. Registration does not imply a certain level of skill or training. The information contained herein is for informational purposes only and should not be construed as personalized investment advice, a solicitation, or an offer to buy or sell any security. Individualized investment advice can only be provided after entering into an advisory agreement. Fitzwilliams Wealth Management, Inc. does not provide tax or legal advice. Please consult your tax and/or legal professional regarding your specific situation. Media appearances are for informational purposes only and do not constitute an endorsement. Investing involves risk, including the potential loss of principal.

When people think about retirement planning, they often focus on one question: How much money will I need?

I believe another question can be just as important: What will that money be able to buy?

Inflation can gradually change the cost of groceries, housing, healthcare, transportation, travel, and many of the other expenses people may encounter throughout retirement. As those costs change, the purchasing power of a dollar may change with them.

That is why retirement planning can involve more than building an account balance or reaching a particular savings target. A comprehensive financial plan may also need to consider future

spending, retirement income needs, time horizon, inflation, investment strategy, and how someone’s financial circumstances could evolve over time.

In this Financial Forecast discussion, I explore how inflation can affect everyday expenses and why purchasing power may matter when evaluating a long-term retirement strategy. I also discuss why investors may benefit from looking at their financial decisions within the broader context of their goals rather than focusing on any one economic factor in isolation.

No one can know exactly what prices, markets, or economic conditions will look like years from now. Planning can instead involve evaluating different possibilities and building a strategy that may be able to adapt as circumstances change.

Watch the video to learn more about how inflation and changing expenses can fit into the retirement planning conversation.

Fitzwilliams Wealth Management, Inc. is an SEC registered investment advisor. FWM and Fitzwilliams Financial are affiliated companies. The content in this video is for informational purposes only and is not personalized investment advice or a solicitation to buy or sell any security. We do not provide tax or legal advice. Media appearances are for informational purposes only and do not constitute an endorsement. Investing involves risk.

Why Stocks Can Rise While Living Costs Stay High: Earnings, Inflation and Interest Rates