How do you gauge inflation/deflation trends?

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GuitarInnovations
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How do you gauge inflation/deflation trends?

Post by GuitarInnovations »

If there are any resources you use, or indicators that seem to have been reliable, I'd like to know how you watch this metric to get a good handle on the state of cash in any given moment.

I found this cool CPI Inflation calculator here, but I don't know historic trends and how far off the numbers need to be to stir a person to take action by shifting their portfolio one way or another.

https://www.bls.gov/data/inflation_calculator.htm

thanks in advance
tibbitts
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Re: How do you gauge inflation/deflation trends?

Post by tibbitts »

Why try? What will you do with this information? What does your portfolio have to do with any rate of inflation?
Topic Author
GuitarInnovations
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Re: How do you gauge inflation/deflation trends?

Post by GuitarInnovations »

If you would indulge my best John Cleese impersonation:

"Sorry, sir, this is the room where people are discussing inflationary/deflationary indicators. You're looking for the room where people are questioning why others would be discussing inflationary/deflationary indicators. That's two doors down. Good day! Thank you! Bye bye!"
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vineviz
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Re: How do you gauge inflation/deflation trends?

Post by vineviz »

GuitarInnovations wrote: Wed Jan 13, 2021 3:38 pm If you would indulge my best John Cleese impersonation:

"Sorry, sir, this is the room where people are discussing inflationary/deflationary indicators. You're looking for the room where people are questioning why others would be discussing inflationary/deflationary indicators. That's two doors down. Good day! Thank you! Bye bye!"
I'm sure this would sound less snarky coming from John Cleese.

As it is, I'm left wondering what kind of help you're actually seeking? The Bureau of Labor Statistics maintains a perfectly indicator of what I THINK you want, which is the Consumer Price Index (CPI). However, this indicator isn't exactly a closely held secret so I suspect you're familiar with it. And if you want a DIFFERENT indicator then we're probably going to know what you intend to do with it, or at least why you find CPI undesirable.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
Topic Author
GuitarInnovations
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Re: How do you gauge inflation/deflation trends?

Post by GuitarInnovations »

vineviz wrote: Wed Jan 13, 2021 5:19 pm
GuitarInnovations wrote: Wed Jan 13, 2021 3:38 pm If you would indulge my best John Cleese impersonation:

"Sorry, sir, this is the room where people are discussing inflationary/deflationary indicators. You're looking for the room where people are questioning why others would be discussing inflationary/deflationary indicators. That's two doors down. Good day! Thank you! Bye bye!"
I'm sure this would sound less snarky coming from John Cleese.

As it is, I'm left wondering what kind of help you're actually seeking? The Bureau of Labor Statistics maintains a perfectly indicator of what I THINK you want, which is the Consumer Price Index (CPI). However, this indicator isn't exactly a closely held secret so I suspect you're familiar with it. And if you want a DIFFERENT indicator then we're probably going to know what you intend to do with it, or at least why you find CPI undesirable.
I'm really appreciative of all the experience and wisdom on this forum, it looks to be the best place around to get solid advice. That being said, it's a bit impertinent to throw multiple questions at someone who has obviously stated their question. If it''s mystifying, then just move one.

One nice thing I've noticed is that even though this happens often in threads, other experienced people will eventually come along and add some insights which are helpful.
YearTrader
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Re: How do you gauge inflation/deflation trends?

Post by YearTrader »

What I read is that you are not looking for historical / current inflation rate, but the forward expected inflation. Then perhaps the break even inflation rate:
https://fred.stlouisfed.org/series/T10YIE

Not sure what can you do with it. It's the market expectation, and in other words, it's already priced-in.
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vineviz
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Re: How do you gauge inflation/deflation trends?

Post by vineviz »

GuitarInnovations wrote: Wed Jan 13, 2021 5:52 pm
vineviz wrote: Wed Jan 13, 2021 5:19 pm
GuitarInnovations wrote: Wed Jan 13, 2021 3:38 pm If you would indulge my best John Cleese impersonation:

"Sorry, sir, this is the room where people are discussing inflationary/deflationary indicators. You're looking for the room where people are questioning why others would be discussing inflationary/deflationary indicators. That's two doors down. Good day! Thank you! Bye bye!"
I'm sure this would sound less snarky coming from John Cleese.

As it is, I'm left wondering what kind of help you're actually seeking? The Bureau of Labor Statistics maintains a perfectly indicator of what I THINK you want, which is the Consumer Price Index (CPI). However, this indicator isn't exactly a closely held secret so I suspect you're familiar with it. And if you want a DIFFERENT indicator then we're probably going to know what you intend to do with it, or at least why you find CPI undesirable.
I'm really appreciative of all the experience and wisdom on this forum, it looks to be the best place around to get solid advice. That being said, it's a bit impertinent to throw multiple questions at someone who has obviously stated their question. If it''s mystifying, then just move one.

One nice thing I've noticed is that even though this happens often in threads, other experienced people will eventually come along and add some insights which are helpful.
I noticed you completely forgot to answer either request for clarification. If your question was as clearly stated as you seem to think then you’d probably have an an answer by now.

What are you trying to use the inflation indicator to accomplish?

Why is CPI not adequate?
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
Topic Author
GuitarInnovations
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Re: How do you gauge inflation/deflation trends?

Post by GuitarInnovations »

YearTrader wrote: Wed Jan 13, 2021 6:01 pm What I read is that you are not looking for historical / current inflation rate, but the forward expected inflation. Then perhaps the break even inflation rate:
https://fred.stlouisfed.org/series/T10YIE

Not sure what can you do with it. It's the market expectation, and in other words, it's already priced-in.
Interesting, thanks for sharing this.
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nisiprius
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Re: How do you gauge inflation/deflation trends?

Post by nisiprius »

I don't think there are any "trends" steady enough or reliable enough to extrapolate. At least, not reliable enough to base any actions on. First, inflation can be triggered by policy decisions made by a small number of people. Second, it tends to feed on itself and snowball. People speak of a wage-price spiral (or a price-wage spiral, depending on which side you're on). So it takes people by surprise.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Topic Author
GuitarInnovations
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Re: How do you gauge inflation/deflation trends?

Post by GuitarInnovations »

nisiprius wrote: Wed Jan 13, 2021 7:57 pm I don't think there are any "trends" steady enough or reliable enough to extrapolate. At least, not reliable enough to base any actions on. First, inflation can be triggered by policy decisions made by a small number of people. Second, it tends to feed on itself and snowball. People speak of a wage-price spiral (or a price-wage spiral, depending on which side you're on). So it takes people by surprise.
Thanks for explaining.
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