Recent economic reports indicate that while the most extreme inflationary spikes have subsided, the path to price stability remains complex. February’s data showed headline inflation at 2.4%, yet the Federal Reserve’s preferred metric—the PCE index—remains more stubborn. According to the Wall Street Journal, this index held at 2.8% in January, with “core” inflation (excluding volatile food and energy) reaching 3.1%.
These figures suggest that getting inflation back to the 2% target is a persistent challenge. Furthermore, the trade tariffs often take several months to fully impact consumer prices, adding another layer of variability to the long-term outlook.
The Energy Factor: Conflict and Costs
Geopolitical tensions involving Iran have recently brought global energy markets into the spotlight. Oil prices have surged past $100 a barrel, a sharp increase that is not yet fully reflected in early 2026 inflation reports.
Economists predict this shift could push headline inflation toward 3.7% if prices remain elevated. Unlike core inflation, energy spikes are felt immediately – not only at the pump but in the rising costs of shipping and travel. A prolonged conflict may also cause the Federal Reserve to delay anticipated interest rate cuts, prioritizing price stability over monetary easing.
Spending Habits: The Primary Risk to Success
Over the long term, a wealth plan is rarely derailed by market volatility and inflation alone; rather, it is often most influenced by spending habits. The risk here is lifestyle creep: every year you spend a bit more, and soon that amount becomes significant relative to today’s baseline spending. If you add higher-than-historic-average long-term inflation rates, the risk of depleting assets before your lifespan increases.
To help guard against lifestyle creep risk, update your plan with your Wealth Manager annually. Proactive monitoring helps avoid long-term issues. It’s also important to know your maximum annual spending guideline so you can tell when your burn rate might be a bit too high. This is not a budgeting process; it’s a way to help ensure your assets remain a sustainable engine for your lifetime goals, providing the clarity needed to spend with confidence today without compromising the legacy or lifestyle of tomorrow.
Please reach out to your Wealth Manager to review your spending plan.
