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Getting Lucky: Inflation Figures are Not a Reliable Signal

Inflation Figures
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EDITOR NOTE: The Wall Street Journal wants investors to know that, as prices on almost everything rise due to inflation, the current inflation figures don’t provide a “reliable signal.” They also say that the Fed’s view that “inflation is transitory” and requires “a big element of luck” to be correct. WSJ’s Jon Hilsenrath notes in his video there is a lot we can learn about from the “Great Inflation” and “Stagflation” of the 1970s. Many experts see a lot of comparable signs between the underlying factors that caused this rough economic period in U.S. history and what is happening today in 2021. 

Investors following inflation figures should accept that they can’t extract a reliable signal from the wild swings, and just hope they continue to get lucky

It is always better to be lucky than right, and for the Federal Reserve and its view that high inflation is transitory, inflation figures lately have brought a big element of luck.

Digging into the numbers shows how easily that luck could go away. If it does, the quiet in markets could be upended. 

Read more at The Wall Street Journal

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