Dow Jones Transport tends to predict inflation

4 באוק׳ 2023

The yellow line is inflation and the candles show the Dow Jones Transport index which represents the fortunes and costs of transportation companies. Transport is a major cost to getting products to market and so if DJT is going up it often then is reflected in the official inflation rate after a lag.

Right now DJT is in a downtrend since the middle of this year. Unless it bounces from here and starts to make higher highs the DJT as a predictor of inflation suggests that inflation is contained. As I showed in my RINF chart, this isn't what is anticipated by the market.

4 באוק׳ 2023

הערה

Just to give my own opinion on the inflation range might be for the next 12 months:

If we see US unemployment rise and US tax receipts fall then we are likely to see inflation touch 0% before it bounces and oscillates in the 1% - 4.5% range.

If the US economy remains resilient then we may see inflation oscillate in the 2% - 6% range. Could US oil have a crisis that causes higher and longer inflation? Anything is possible but I don't think that's where we are headed. I think people are too enamored by the idea of hyper-inflation because it proves governments overspend. We'd need to see radical amounts of money supply get into the real economy to see rapid currency devaluation. It's a Bitcoiner's dream but there's decades left for the US dollar to remain stronger than the rest.