Vanguard Economists Say: Inflation Might Be Better Than It Looks. Here's Why That's Good News for Stocks.
Trump's tariffs haven’t gone away, but their impact on inflation might fade away in 2027.
Inflation has been a concern for the U.S. economy, but recent data suggests it may be improving, which could be good news for stocks. The Consumer Price Index (CPI) for October 2026 showed a 0.4% increase from the previous month, down from 0.6% in September. While this is still higher than in 2022, it's a significant improvement.
Vanguard, a major investment company, forecasts that core inflation, which excludes volatile food and energy prices, could drop to 2.5% by April 2027, close to the Federal Reserve's target of 2%. This improvement is largely due to the removal of tariffs implemented by the Trump administration in 2025. The Federal Reserve has also indicated it may raise interest rates again in early 2027, which could be beneficial for the economy if it stays in check.
If Vanguard's projections hold true, the U.S. economy could stabilize, and tech stocks could benefit from steady interest rates. Meanwhile, the S&P 500 ETF (VOO) and the Invesco Nasdaq 100 ETF (QQQM) could also perform well if inflation and interest rates remain stable.
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