U.S. Core Inflation Expected Over the Next 21 Months (Leading Indicator) M2 velocity year-over-year tends to lead U.S. core CPI by 21 months (R² = 0.52 since 1996). It has been quite accurate for more than 20 years. Click the Image to Enlarge
Core Consumer Price Inflation vs. Velocity of Money There are downside risks to U.S. inflation, as velocity of money tends to lead U.S. core CPI. Image: BCA Research
Inflation-Adjusted Investment in U.S. Stock Market This chart puts into perspective the long-term trend of the S&P 500 Total Return adjusted for CPI inflation (real CAGR = 6.7%). Image: Hondo Tomasz
Inflation and S&P 500 6-Month Realised Volatility Since 1987, the S&P 500 6-month realised volatility has been the lowest, when U.S. CPI growth has been in the 2 to 3 per cent range. Image: Societe Generale Cross Asset Research
U.S. Core Inflation vs. Home Prices (Leading Indicator) Home prices suggest that core CPI seems likely to fall further. Image: Scotiabank Economics
Difference in U.S. Inflation Measures PCE and CPI diverge, suggesting that PCE may be understimated. Image: Swedbank Research
Ranking Developed Economies by Key Growth Metrics Currently, the United States is ranked numer one in real GDP, core CPI and consumer confidence. Image: Arbor Research & Trading
U.S. Labor Force vs. Inflation The chart shows the enduring link between labor force and inflation. The chart also suggests that U.S. labor force leads U.S. CPI by three years. Demographic trends imply subdued inflation. You may also like “World Population & Demographics – More People Over 65 than Under 5 for the First Time.”…
Civilian Labor Force Growth vs. Inflation since 1962 This chart suggests that civilian labor force growth leads CPI by four years. Image: Bank of America Merrill Lynch
Why Is Core Inflation So Low Compared To Previous Business Cycles? The Consumer Price Index Less Food & Energy (Core CPI) is very low compared to previous business cycles in the US, for several reasons: – not fast-rising money supply – globalization: inflation is a global phenomenon – lack of wage acceleration – increase in…