It’s surprising at first glance that the S&P 500 hasn’t grown significantly in inflation-adjusted terms over the past 3.5 years, but it makes sense when you consider the economic conditions during this period.

  1. Inflation Impact: High inflation since 2021 has eroded the real value of returns. Even though the S&P 500 has nominally increased from its pre-pandemic levels, rising prices have eaten away at those gains. In essence, your investments may be worth more on paper, but they buy less in real terms.

  2. Interest Rates and Market PressureTo combat inflation, central banks, like the Federal Reserve, have raised interest rates aggressively. Higher rates make borrowing more expensive for companies, which can slow down their growth and reduce stock market performance. Additionally, bonds become more attractive relative to stocks, pulling money out of equities.

  3. Market Volatility: Over the past few years, markets have seen ups and downs driven by COVID-19 disruptions, geopolitical tensions (like the Russia-Ukraine war), and shifts in monetary policy. These factors created a challenging environment for sustained stock market growth.


While the S&P 500 remains a strong long-term investment, its lack of real progress over this period highlights the challenges inflation poses for preserving and growing wealth. It’s a reminder for investors to consider inflation-resistant strategies, like diversification into sectors that perform well during inflation or investing in assets like commodities and inflation-linked bonds.