Understanding the Impact of High Inflation: Insights for Enovis Employees and Retirees

Healthcare Provider Update: Healthcare Provider for Enovis Enovis Corporation focuses primarily on innovative medical technologies and doesn't act as a traditional healthcare provider. Instead, their products are frequently utilized by healthcare providers, including hospitals and outpatient clinics, to enhance patient outcomes in areas such as orthopedic rehabilitation and musculoskeletal health. Potential Healthcare Cost Increases in 2026 As 2026 approaches, significant hikes in healthcare costs are anticipated, driven primarily by soaring drug prices, rising hospital admissions, and increasing behavioral health needs. A recent analysis indicates medical costs are forecasted to rise by approximately 8.5% for group plans and 7.5% for individual market plans. The impending expiration of enhanced federal subsidies is also likely to exacerbate these increases, potentially leading to a dramatic 75% rise in out-of-pocket premiums for policyholders, significantly impacting consumers' access to affordable coverage. As insurers navigate these challenges, cost control measures will be crucial in preserving the financial viability of healthcare for many Americans. Click here to learn more

For Enovis employees building long-term wealth, the energy sector's Q1 2026 rally — fueled by Strait of Hormuz supply disruptions — underscores the importance of revisiting estate planning strategies to account for rapidly appreciating company stock and energy sector holdings.

Global energy markets have been upended in Q1 2026, with Brent crude near ~$107/barrel and WTI near ~$94/barrel following the near-closure of the Strait of Hormuz — a chokepoint carrying approximately 20% of the world's seaborne oil supply.

The natural gas complex has moved sharply alongside crude, with Henry Hub at approximately ~$2.94/MMBtu and European TTF near ~$16.90/MMBtu, reflecting Iran's successful strikes on Gulf LNG facilities that crippled nearly a fifth of global LNG supply.

Estate planning for Enovis employees in Q1 2026 may benefit from reviewing irrevocable trust structures, GRATs, or other vehicles designed to transfer appreciating energy sector assets in a tax-efficient manner before prices potentially normalize.

In March 2022, the Consumer Price Index for All Urban Consumers (CPI-U), the most common measure of inflation, rose at an annual rate of 8.5%, the highest level since December 1981. ¹  It's not surprising that a Gallup poll at the end of March found that one out of six Americans considers inflation to be the most important problem facing the United States. ² 

When inflation began rising in the spring of 2021, many economists, including policymakers at the Federal Reserve, believed the increase would be transitory and subside over a period of months. The inflation surge ultimately proved more stubborn than expected. It is helpful to understand the forces behind those rising prices, the Fed's response to combat them, and how the situation ultimately resolved.

 

Hot Economy Meets Russia and China
The fundamental cause of rising inflation continues to be the growing pains of a rapidly opening economy — a combination of pent-up consumer demand, supply-chain slowdowns, and not enough workers to fill open jobs. Loose Federal Reserve monetary policies and billions of dollars in government stimulus helped prevent a deeper recession but added fuel to the fire when the economy reopened.

 

The Russian invasion of Ukraine placed additional upward pressure on already high global fuel and food prices. ³  At the same time, a COVID resurgence in China led to strict lockdowns that closed factories and tightened already struggling supply chains for Chinese goods. The volume of cargo handled by the port of Shanghai, the world's busiest port, dropped by an estimated 40% in early April. ⁴

Behind the Headlines
Although the 8.5% year-over-year 'headline' inflation in March 2022 was a striking number for clients to consider at the time, monthly numbers provided a clearer picture of the trend. The month-over-month increase of 1.2% was extremely high, but more than half of it was due to gasoline prices, which rose 18.3% in March alone. ⁵  Despite the Russia-Ukraine conflict and increased seasonal demand, U.S. gas prices dropped in April, but the trend was moving upward by the end of the month. ⁶  The federal government's decision to release one million barrels of oil per day from the Strategic Petroleum Reserve for the next six months and allow summer sales of higher-ethanol gasoline may help moderate prices. ⁷

 

Core inflation, which strips out volatile food and energy prices, rose 6.5% year-over-year in March, the highest rate since 1982. However, it's important that our Enovis clients consider that the month-over-month increase from February to March was just 0.3%, the slowest pace in six months. Another positive sign was the price of used cars and trucks, which rose more than 35% over the last 12 months (a prime driver of general inflation) but dropped 3.8% in March. ⁸

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Wages and Consumer Demand
In March, average hourly earnings increased by 5.6% — but not enough to keep up with inflation and blunt the effects that impacted a variety of businesses, as well as many Enovis employees and retirees around the country. Lower-paid service workers received higher increases, with wages jumping by almost 15% for non-management employees in the leisure and hospitality industry. Although inflation cut deeply into wage gains over the prior year, wages have increased at about the same rate as inflation over the two-year period of the pandemic. ⁹

One of the central questions at the time was whether rising wages would enable consumers to continue to pay higher prices, which can lead to an inflationary spiral of ever-increasing wages and prices. Signals were mixed: consumer spending rose 1.1% in March 2022, but an early April 2022 poll found that two out of three Americans had already cut back on spending due to inflation. ^10-11

Soft or Hard Landing?
The inflationary situation raised many questions about the path forward. The Federal Open Market Committee (FOMC) of the Federal Reserve laid out a plan to fight inflation by raising interest rates and tightening the money supply. After dropping the benchmark federal funds rate to near zero to stimulate the economy at the onset of the pandemic, the FOMC raised the rate by 0.25% at its March 2022 meeting and projected the equivalent of six more quarter-percent increases by the end of 2022 and three or four more in 2023. ¹²  That path was projected to bring the rate to around 2.75%, just above what the FOMC considered a 'neutral rate' that would neither stimulate nor restrain the economy. ¹³

Those rate increases successfully brought the Fed's preferred measure of inflation, the Personal Consumption Expenditures (PCE) Price Index, down toward the Fed's 2% target -- a gradual disinflation that played out through 2023 and 2024. ¹⁴  PCE inflation -- which had reached 6.6% in March 2022 -- tends to run below CPI; as the Fed's tightening took hold, both measures declined meaningfully through 2023 and 2024. ¹⁵

The FOMC went on to raise the fund's rate by 0.5% at its May 2022 meeting -- the first half-percent increase since May 2000 -- and continued hiking aggressively through 2022 and into 2023. The FOMC also reduced the Fed's bond holdings to tighten the money supply. ¹⁶