Inflation Measures & Market

This chart presents a comparative analysis of different inflation measures alongside the U.S. market performance, represented by the Wilshire 5000 Total Market Full Cap Index.

  1. Underlying Inflation Gauge (Full Data Set Measure): This gauge, developed by the Federal Reserve Bank of New York, measures underlying inflation by incorporating a wide range of economic data beyond prices. This includes variables from the labor market, housing sector, consumer expectations, and financial markets.

  2. Underlying Inflation Gauge (Prices-Only Measure): This version of the Underlying Inflation Gauge focuses solely on price data, offering a narrower but more traditional view of inflation.

  3. Consumer Price Index (CPI) for All Urban Consumers (All Items): This is the most common measure of inflation in the U.S. It tracks the change in prices paid by urban consumers for a basket of goods and services.

Overlaying these measures with the Wilshire 5000 Index provides insights into how different views of inflation may correlate with market performance.

Potential Interpretations:

Positive Scenario: If inflation measures are stable and the Wilshire 5000 Index is trending upwards, this suggests the market is positively responding to a controlled inflationary environment.

Negative Scenario: If inflation measures are rapidly rising and the Wilshire 5000 Index is falling, this could signal that heightened inflation concerns are negatively impacting market performance.

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