Chief Investment Strategist, The Freeport Society
It’s everything I hoped it would be…
Except for the embarrassing temporary bridge over the Rímac River.
But the new airport in Lima, Peru (that I told you about last week) is big and spacious. It has that first-world look and feel. And it has all the amenities that make modern travel almost tolerable.
In fact, I’m sitting in the airline lounge right now with my obligatory preflight Negroni poured over a large ice ball.
The Miami International Airport, where I land, will be a material step down.
The functionality of an airport remains the same, regardless of the bells and whistles… but they can feel different.
I ponder this as I dig through the inflation numbers.
The consumer price index (CPI) continues to moderate. It came in at 2.4% in May.
That’s high, of course. But it’s not far from the Federal Reserve’s 2% target. It’s also lower than economists expected. It helped that energy prices fell 3.5%.
But it doesn’t feel like things are improving.
Inflation is like interest. It compounds.
Yes, it “only” rose at a 2.4% clip last month. But that 2.4% is on top of the 25% increase in prices we’ve seen since 2020.
Prices may be rising at a slower rate. But they’re still rising.
Meanwhile, core inflation – which strips out choppy food and energy prices – is still rising at a 2.8% clip. Housing is still inflating at 3.9% and utilities at 6.8%.
All before we calculate the impacts of the tariffs.
So, in today’s Navigator, I explain what the numbers are pointing to and how that will lead us to one of the biggest investment opportunities of our lifetime: The automation revolution that’s about to reshape the U.S. economy.
What Happens Next?
It’s not a fairy-tale ending.
President Trump’s tariff war will probably fuel inflation in the short-term. Medium-term, repealing the tariffs would reverse the damage within months.
Longer-term, tariffs probably won’t matter all that much. Instead, there’s a bigger issue – one with no quick fix.
Services inflation rose 3.6% in May. It’s consistently outstripped goods inflation for three years.
Tariffs affect the prices of goods. In a tangential way, they could increase the cost of subscription services (like cellphones) because the providers must pay more for the equipment.
Demographics affect the price of services.
The U.S. economy has grown by about 38% over the past five years. The working age population has grown by just 2%.
As the Baby Boomers age out of the workforce, up-and-coming Gen Z-ers (born between 1997 and 2012) are barely replacing them.
Also, when a Boomer retires, they take 40 years of experience with them. The kid fresh out of high school or college hasn’t developed any real skills yet and won’t be meaningfully productive for a few years.
This is why services inflation is so stubbornly hard to kill.
And it can only get worse as Trump fights to deport a million immigrants per year. Removing an extra four million people over his term effectively undoes all working age population growth since 2020.
There’s Only One Way Out
Corporate America isn’t stupid. They can read the demographic handwriting on the wall and see that labor isn’t going to be cheaper or more plentiful any time soon.
That’s why they’re investing heavily in automation and AI. It’s either replace humans with machines or die.
Based on the 2025 AI Index Report from Stanford University’s Institute for Human-Centered Artificial Intelligence, U.S. private investment in AI reached a record-breaking $109 billion in 2024.
That number will only continue to rise.
To invest in this trend, most investors have focused on hardware providers like Nvidia (NVDA) or high-profile adopters like Tesla (TSLA), which is planning to launch its AI-driven robotaxi service in the coming weeks.
Nvidia in particular remains one of the favorite long-term investments of my fellow Freeport Society Co-Founder and investing legend Louis Navellier.
But, for a more diversified approach, you could try the Xtrackers Artificial Intelligence and Big Data ETF (XAIX), which I recommended to my Freeport Investor readers at the end of last year. It’s up about 5% as I write this.
More broadly, keep your eyes open for anything that promises to replace human labor. That’s the single biggest investment trend of the next decade… and probably the rest of our lives.
To life, liberty, and the pursuit of wealth,
Charles Sizemore
Chief Investment Strategist, The Freeport Society