#Economy & #Stocks Review - Inflation Reality

E&S Review

Much of today's economic data, time series officially collected and produced, are highly unreliable. Statisticians employ well-documented techniques such as geometric smoothing, seasonal adjustments, substitution, double counting, and hedonic to adjust economic outcomes as far back as the 1980s. Politicians and central bankers use these techniques for political gain.

Data massaged by statistical techniques (tricks) are revised when nobody is looking, or Administrations or public policies change.

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Inflation Reality

People believe what they see. Politics thrives on this backdrop.

The 2024 election will be a sh*tshow. Few see the world objectively. The majority will not trust objectivity. Inflation is dead, politicians says. The Inflation Reduction Act has slain it.

The invisible hand is tapping down inflation sharply through a rapid decline in economic activity. The inflation oscillator, the computer's real-time measure of marginal inflation, could drop below zero in September (Chart 1). Today's bullish impulse has been above zero line for 46 months.

Chart 1: Marginal Inflation

Inflationary pressures are falling fast due to a sharp drop in economic activity (see Chart 2). The EAC's ITCO has fallen below 0, and the LTCO is beginning to decline. The E&S Report discusses more significant economic deterioration through alternate calculations of the EAC.  The EAC defines the economic backdrop long before mainstream and social media recognize it.

Chart 2: Economic Activity Composite

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