CPI Chart <--- I don't understand

[kmiklas]

Can a greater mind please explain what this chart means?

I picked it up Friday from BB news.

- What does the drop in percentage mean as time (here, in quarters) moves forward?
- What exactly is consumer sentiment?
- Economist fears are driving it lower? Why

I'd think that inflation fear would push the expectation higher.

 

[DiceAreCast]

What's there to explain? The data is inflation expectations. The expectations for a given forecast period rises over subsequent surveys. Why the expectations are lower for farther forecast periods than nearer ones is because inflation in the next few quarters is expected to be higher than for next year because economists expect that we will come out of covid and that this will raise prices by more in the nearest quarters than farther out quarters. That's how I read this chart and which coincides with my views.

Can a greater mind please explain what this chart means?

I picked it up Friday from BB news.

- What does the drop in percentage mean as time (here, in quarters) moves forward?
- What exactly is consumer sentiment?
- Economist fears are driving it lower? Why

I'd think that inflation fear would push the expectation higher.

 

[kmiklas]

What's there to explain? The data is inflation expectations. The expectations for a given forecast period rises over subsequent surveys. Why the expectations are lower for farther forecast periods than nearer ones is because inflation in the next few quarters is expected to be higher than for next year because economists expect that we will come out of covid and that this will raise prices by more in the nearest quarters than farther out quarters. That's how I read this chart and which coincides with my views.

Ooh thank you, that clears it up. I was reading them as PAST quarters; i.e. from 2020 into Q1 of 2021z

 

[Overnight]

Here's the official source for the data you see the government push out...

Inflation expectations and consumer sentiment...

"Survey of about 500 consumers which asks respondents to rate the relative level of current and future economic conditions; University of Michigan (UoM);

http://www.sca.isr.umich.edu/

Yep. Those medium-impact reads are based on 500 random people. (Out of 300,000,000).

I am sure the Bloomberg source your chart is based upon has a similar sample set.

500 random dumb people in this country. They see prices rising when they go to the grocery store, so when they are asked in the survey, "Do you see prices for goods rising next month?" They will answer yes.

So easy, a caveman can do it, or so stupid, the market should ignore what the hell the random 500 jamokes have to say? Hmmmm!