The S&P 500 Failed to Beat Inflation Only 4 Times in 20 Years. Here’s the Pattern.
The S&P 500 has gained 13.5% in 2026, outpacing US shopper costs, which rose 3.4% over the 12 months via July.
The pattern additionally holds over the long run. Historical information present that the index has outpaced US inflation in 16 of the previous 20 calendar years.
How the S&P 500 Has Performed Against Inflation
The S&P 500 delivered a 14.76% actual return in 2025 after accounting for two.70% inflation, in accordance to The Kobeissi Letter. The index additionally recorded sturdy actual returns in the earlier two years, gaining 21.47% in 2024 and 22.11% in 2023.
“Stocks have traditionally been one in all the greatest hedges in opposition to inflation,” the post learn.
The document is thinner than the depend suggests. The 4 years when shares failed to beat inflation have been 2008, 2011, 2018, and 2022.
Three of these 4 years ended with inflation under 3%. Consumer costs rose simply 0.1% in December 2008, but the S&P 500 plunged 37% that yr.
The 2022 end result was totally different. The BLS reported a 6.5% year-over-year enhance in shopper costs in December. The S&P 500 fell 18.11%. The actual loss got here to roughly 23%.
Only three years in the interval ended with December inflation above 4%. The S&P 500 nonetheless outpaced inflation in 2007 and 2021 however fell quick in 2022. The largest actual return got here in 2013, when the index gained 30.42%, and inflation stood at 1.5%.
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(*20*)AI Earnings Are Carrying the Real Return
Earnings did most of the work in 2025. First Trust calculated that 13.5 of the index’s 17.9 share factors got here from greater earnings per share.
According to FactSet, analysts undertaking 28.2% year-over-year earnings development for the third quarter of 2026. They count on 31.2% throughout the full yr.
That development is concentrated in a slim group. Ben Snider of Goldman Sachs Research mentioned in May that AI infrastructure beneficiaries ought to provide roughly half of index earnings development this yr. He additionally flagged narrowing market breadth as a threat sign.
Meanwhile, 9 of the decade’s 10 greatest S&P 500 performers trace to the same buildout. Nvidia leads that checklist by a large margin, with positive factors above 13,000%.
Inflation has cooled since the spring. Consumer costs rose 4.25% in the yr via May earlier than easing to 3.4% in July.
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