IDEAS home Printed from https://ideas.repec.org/a/gam/jijfss/v13y2025i1p9-d1565900.html
   My bibliography  Save this article

The Impact of Inflation on the U.S. Stock Market After the COVID-19 Pandemic

Author

Listed:
  • Willem Thorbecke

    (Research Institute of Economy, Trade and Industry, 1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan)

Abstract

Inflation remained quiescent for several decades and then surged in 2021 and 2022. Inflation subsequently fell in 2023 and 2024. This paper investigates how the rise and fall in inflation after 2019 affected the U.S. stock market. To do this, it estimates a fully specified multi-factor model that measures the exposure of 54 assets to inflation, monetary policy, and other macroeconomic variables over the 1994 to 2019 period. This paper then uses the inflation betas to investigate how investors’ perceptions of inflation changed between 2020 and 2024. The results indicate that concerns about inflation roiled the stock market over this period. The Fed’s anti-inflationary policies whipsawed markets even more. These findings highlight the dangers that arise when monetary policy allows inflation to accelerate.

Suggested Citation

  • Willem Thorbecke, 2025. "The Impact of Inflation on the U.S. Stock Market After the COVID-19 Pandemic," IJFS, MDPI, vol. 13(1), pages 1-20, January.
    • Handle: RePEc:gam:jijfss:v:13:y:2025:i:1:p:9-:d:1565900
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7072/13/1/9/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7072/13/1/9/
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jijfss:v:13:y:2025:i:1:p:9-:d:1565900. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.