Predicting the Markets

Chapter 4 Charts:
Predicting Inflation
Yardeni Research, Inc.

November 6, 2020

Dr. Edward Yardeni

Chief Investment Strategist

Mali Quintana
Senior Economist
info@yardenibook.com

Please visit our sites at

www.yardeni.com
blog.yardeni.com

thinking outside the box

Table Of Contents Table Of Contents
Predicting Inflation 1-26

November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.

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 Predicting Inflation
Figure 1.
18 18
17 US CONSUMER PRICE INDEX 17
16 (yearly percent change) 16
15 15
14 14
13 13
12 12
11 11
10 10
9 9
8 8
7 7
6 6
5 5
4 4
3 3
2 2
Sep
1 1
0 0
-1 1960s 1970s 1980s 1990s 2000s 2010s 2020s -1
-2 -2
yardeni.com
-3 -3
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26 28 30

Source: Bureau of Labor Statistics.

Figure 2.
20 20
US CONSUMER PRICE INDEX
18 (yearly percent change) 18

16 16

14 14
CPI Inflation
12
Headline 12
Core*
10 10

8 8

6 6

4 4

2 2
Sep
0 0

-2 -2
yardeni.com
-4 -4
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Excluding food and energy.

Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Bureau of Labor Statistics.

Page 1 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 3.
42 42
37 WEST TEXAS INTERMEDIATE CRUDE OIL PRICE 37
32 1967-1984 32
27 (dollars per barrel, monthly, ratio scale) 27

22 22

17 17

12 12
yardeni.com

7 7

2 2
67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84

* Shaded areas denote recessions according to the National Bureau of Economic Research. Monthly from 1946 to 1984, daily thereafter.
Source: Haver Analytics.

Figure 4.
16 16
US CONSUMER PRICE INDEX &
AVERAGE HOURLY EARNINGS: 1967-1984
14 (yearly percent change) 14

12 12

10 10

8 8

6 6

4 Inflation 4
Average Hourly Earnings*
CPI
yardeni.com
2 2
67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84

* Production & nonsupervisory workers.

Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Bureau of Labor Statistics.

Page 2 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 5.
13 13
AVERAGE HOURLY EARNINGS*
12 (yearly percent change) 12

11 11

10 T 10

9 9

8 8

7 7

6 6

5 5
Oct
4 4

3 3

2 2
yardeni.com
1 1
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

* Production & nonsupervisory workers.

Note: T = President Reagan fires members of PATCO on August 5, 1981. Shaded areas denote recessions according to the National Bureau of
Economic Research.
Source: Bureau of Labor Statistics.

Figure 6.
20 20
UNION MEMBERS
(as a percent of private wage & salary employment)

15 15

Private Sector
Union Membership

10 10

2019
yardeni.com
5 5
84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Source: Bureau of Labor Statistics.

Page 3 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 7.
52 13
AGE WAVE & INFLATION
12
50
11

48 10

9
46
8
44
7

6
42
5
40
4

38 3
Age Wave*
Sep 2
36 Inflation Trend**
1
yardeni.com
34 0
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Percent of labor force 16-34 years old.

** Five-year percent change in CPI at annual rate.
Source: Bureau of Labor Statistics.

Figure 8.
6 6
PRODUCTIVITY: NONFARM BUSINESS
(20-quarter percent change, annual rate)

4 4

2 2
Q3

yardeni.com
0 0
52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Bureau of Labor Statistics.

Page 4 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 9.
700 700
GDP IMPLICIT PRICE DEFLATORS
(2012=100)
600 600

Price Deflators
Information Processing
500 Equipment 500
Software

400 400

300 300

200 200

100 Q3 100

yardeni.com
0 0
64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Source: Bureau of Economic Analysis.

Figure 10.
65 65
RETAIL SALES: GENERAL MERCHANDISE STORES (GMS) & ONLINE SHOPPING
60 (as percent of total In-Store + Online GAFO*) 60

55 Percent of Total GAFO* 55

Online**
50 GMS: Warehouse Clubs & Super Stores 50
GMS: Department Stores & Others
45 45
Aug
40 40
yardeni.com

35 35

30 30

25 25

20 20

15 15

10 10

5 5
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

* GAFO (general merchandise, apparel and accessories, furniture, and other sales) includes retailers that specialize in department-store types of merchandise
such as furniture & home furnishings, electronics & appliances, clothing & accessories, sporting goods, hobby, book, and music, general merchandise,
office supply, stationery, and gift stores.
** Electronic shopping and mail order houses.
Source: Census Bureau and Haver Analytics.

Page 5 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 11.
100 100
US CONSUMER PRICE INDEX*: 1800-1947
300 300
250
CPI** Oct 250
Cold War
200 (1947-1989) 200
150 150
80 80
100 100
50 50
War of 1812 0 0
(1812-1815)
19

19

19

19

19

19

20

20

20
World War I World War II
48

58

68

78

88

98

08

18

28
(1914-1918) (1939-1945)
60 60

Civil War
(1861-1865)

40 40

yardeni.com
20 20
18

18

18

18

18

18

18

18

18

18

19

19

19

19

19

19
00

10

20

30

40

50

60

70

80

90

00

10

20

30

40

50
* Annual data. Base index from 1800 to 1947 is 1967 = 100.
** 1982-84=100.
Source: Census Bureau, Historical Statistics of the United States.

Figure 12.
20 20
CONSUMER PRICE INDEX: ADVANCED ECONOMIES
(yearly percent change)
18 18

16 16

14 14

12 12

10 10

8 8

6 6

4 4

2 2
Dec

0 0

yardeni.com
-2 -2
69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23

Source: IMF.

Page 6 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 13.
30 30
CONSUMER PRICE INDEX: JAPAN
(yearly percent change)
25 25

20 20

15 15

10 10

5 5

0 Sep 0

yardeni.com
-5 -5
72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Source: Haver Analytics.

Figure 14.
10 10
CONSUMER PRICE INDEXES: DURABLE GOODS
(percent change)
0 0

-10 -10

Sep
-20 -20

-30 -30

US
-40 Eurozone -40
Japan
Sweden
Switzerland
-50 Taiwan -50
UK
yardeni.com
-60 -60
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Source: Bureau of Labor Statistics.

Page 7 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 15.
12 12
CHINA: PRODUCER PRICE INDEX
(yearly percent change)
10 10

8 8

6 6

4 4

2 2

0 0

-2 Sep -2

-4 -4

-6 -6

-8 -8

yardeni.com
-10 -10
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Source: China National Bureau of Statistics.

Figure 16.
10 10
CHINA: CONSUMER PRICE INDEX
(yearly percent change)
8 8

6 6

4 4

2 2
Sep

0 0

-2 -2

yardeni.com
-4 -4
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21

Source: Haver Analytics.

Page 8 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 17.
110 110
OUTPUT GAP: ACTUAL DIVIDED BY POTENTIAL REAL GDP
(percent)

105 105

100 100

Q3

95 95

yardeni.com
90 90
49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25

Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Congressional Budget Office and Bureau of Economic Analysis.

Figure 18.
96 110
RESOURCE UTILIZATION RATE & OUTPUT GAP
94 (percent)
Resource Utilization Rate*
92
Output Gap**
90 105

88

86

84 100

82 Sep

80

78 95

76

74
yardeni.com
72 90
68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Average of all industries’ capacity utilization rate and employment rate, i.e., percentage of labor force that is employed.
** Actual divided by potential real GDP in percent.
Source: Congressional Budget Office, Bureau of Labor Statistics, and Federal Reserve Board.

Page 9 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 19.
6.5 6.5
NON-ACCELERATING INFLATION RATE OF UNEMPLOYMENT (NAIRU):
ESTIMATED & PROJECTED
(percent)

6.0 6.0

5.5 5.5

5.0 5.0

yardeni.com
4.5 4.5
49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 00 03 06 09 12 15 18 21 24 27

Source: Congressional Budget Office.

Figure 20.
5 5
NAIRU* MINUS UNEMPLOYMENT RATE
(percent)

0 0

Q3
-5 -5

yardeni.com
-10 -10
49 54 59 64 69 74 79 84 89 94 99 04 09 14 19 24 29

* Non-accelerating inflation rate of unemployment.

Source: Congressional Budget Office.

Page 10 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 21.
12000 12000
US MONEY MULTIPLIER
(M2 as a ratio of Monetary Base)

10000 10000

8000 8000

6000 6000

4000 4000
Sep

yardeni.com
2000 2000
62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Source: Federal Reserve Board.

Figure 22.
2.25 2.25
2.20 M2 VELOCITY 2.20
2.15 (Nominal GDP as a ratio of M2) 2.15
2.10 2.10
2.05 2.05
2.00 2.00
1.95 1.95
1.90 1.90
1.85 1.85
1.80 1.80
1.75 1.75
1.70 1.70
1.65 1.65
1.60 1.60
1.55 1.55
1.50 1.50
1.45 1.45
1.40 1.40
1.35 1.35
1.30 1.30
1.25 1.25
1.20 1.20
1.15 Q3 1.15
1.10 1.10
1.05 yardeni.com 1.05
1.00 1.00
62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Source: Federal Reserve Board.

Page 11 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 23.
18 18
WAGE INFLATION & UNEMPLOYMENT RATE
16
(using average hourly earnings) 16

14 Unemployment Rate 14
(percent)
Average Hourly Earnings*
12 (yearly percent change) 12

10 10

8 8
Oct
6 6

Oct
4 4

2 2

yardeni.com
0 0
64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Production & nonsupervisory workers.

Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Bureau of Labor Statistics.

Figure 24.
30 30

28 UNEMPLOYMENT RATES 28
(percent, sa)
26 26

24 Underemployment Rate* 24
Plus Unemployment Rate
22 U-6 Rate** 22

20 Unemployment Rate 20

18 18

16 16

14 14

12 12
Oct
10 10

8 8

6 6

4 4

2 2
54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Total number of people working part time for economic reasons as percent of civilian labor force plus part time for economic reasons
as percent of civilian labor force.
** Unemployed plus marginally attached
Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Bureau of Labor Statistics.

Page 12 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 25.
5.6 40
JOB OPENINGS: NATIONAL & SMALL BUSINESS
5.2 (percent, 3-month average)
JOLTS: Job Openings Rate*
35
4.8 Oct

4.4 30

4.0

25
3.6

3.2
20

2.8

2.4 15

2.0
NFIB: Small Business
with Job Openings**
10
1.6

yardeni.com
1.2 5
74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* The job openings rate is the job openings level as a percent of total employment plus job openings level.
** First month of every quarter from 1974 to 1986, then monthly.
Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Bureau of Labor Statistics and National Federation of Independent Business.

Figure 26.
18 41
NFIB SMALL BUSINESS SURVEY: JOB OPENINGS & UNEMPLOYMENT RATE 39

16 37
35
NFIB: Small Business Oct
with Job Openings* 33
14 (percent, 3-month average)
31
29
12 27
25
10 23
21

8 19
17
Oct
15
6
13
11
4
Unemployment Rate
(percent) 9
7
yardeni.com
2 5
74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* First month of every quarter from 1974 to 1986, then monthly.

Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Bureau of Labor Statistics and National Federation of Independent Business.

Page 13 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 27.
10 40
WAGE INFLATION & SMALL BUSINESS JOB OPENINGS
9
NFIB: Small Business 35
with Job Openings** Oct
Average Hourly Earnings* (percent, 3-month average,
8 (yearly percent change) 12 months ahead)
30
7

25
6

5 20
Oct
4
15

10
2

1 5
74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Production & nonsupervisory workers

** First month of every quarter from 1974 to 1986, then monthly.
Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Bureau of Economic Analysis and National Federation of Independent Business.

Figure 28.
150 2.8
QUITS RATE & CONSUMER CONFIDENCE INDEX

2.6
Quits Rate*
(percent, sa)
2.4
Consumer Confidence
100 Index (1985=100, sa) Oct
2.2

2.0

1.8
50

1.6

1.4

yardeni.com
0 1.2
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

* Private industry.
Source: Bureau of Labor Statistics and The Conference Board.

Page 14 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 29.
7 7
TOTAL UNEMPLOYED AS RATIO OF JOB OPENINGS

6 6

5 5

4 4

3 3

2 Aug 2

1 1

yardeni.com
0 0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Bureau of Labor Statistics.

Figure 30.
60 60
NFIB SMALL BUSINESS SURVEY: JOB OPENINGS & QUALIFIED APPLICANTS
(percent, sa)

50 50
Oct

Percent Small Business

40 With Few or no qualified 40
applicants for job openings
With Job Openings*
Oct
30 30

20 20

10 10

yardeni.com
0 0
74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* First month of every quarter from 1974 to 1986, then monthly.

Source: National Federation of Independent Business.

Page 15 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 31.
11.0 11.0
10.5 AVERAGE HOURLY EARNINGS 10.5
10.0 (yearly percent change) 10.0
9.5 9.5
9.0 9.0
8.5 8.5
8.0 8.0
7.5 7.5
7.0 7.0
6.5 6.5
6.0 6.0
5.5 5.5
5.0 5.0
4.5 Oct 4.5
4.0 4.0
3.5 3.5
3.0 3.0
Average Hourly Earnings
2.5 Private Industry (4.5) 2.5
2.0 Production & 2.0
1.5 Nonsupervisory Workers (4.5) 1.5
yardeni.com
1.0 1.0
64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Bureau of Labor Statistics.

Figure 32.
14 14
AVERAGE HOURLY EARNINGS: MANUFACTURING*
(yearly percent change)
12 12

10 10

8 8

6 6

4 4
Oct

2 2

yardeni.com
0 0
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Production & nonsupervisory workers.

Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Bureau of Labor Statistics.

Page 16 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 33.
16 16
EMPLOYMENT COST INDEX: PRIVATE INDUSTRY
(yearly percent change)
14 14

12
Employment Cost Index 12
Total Compensation
Wages & Salaries
10
Benefits 10

8 8

6 6

4 4

Q3
2 2

yardeni.com
0 0
81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Source: Bureau of Labor Statistics.

Figure 34.
8.2 8.2
AVERAGE HOURLY EARNINGS
7.8 & EMPLOYMENT COST INDEX (ECI) 7.8
7.4 (yearly percent change) 7.4
7.0 7.0
Average Hourly Earnings*
6.6 6.6
ECI Wages & Salaries**
6.2 6.2
5.8 5.8
5.4 5.4
5.0 5.0
4.6 4.6
Oct
4.2 4.2
3.8 3.8
3.4 3.4
3.0 3.0
2.6 2.6
2.2 2.2
1.8 1.8
1.4 1.4
yardeni.com
1.0 1.0
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23

* Production and nonsupervisory workers.

** All private industry.
Source: Bureau of Labor Statistics and Federal Reserve Bank of Atlanta.

Page 17 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 35.
10 15
HOURLY COMPENSATION & AVERAGE HOURLY EARNINGS
(yearly percent change)

8 Hourly Compensation: Nonfarm Business

AHE: Production & Nonsupervisory Workers 10

6
Q3

5
Oct
4

0
2

yardeni.com
0 -5
64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Source: Bureau of Labor Statistics.

Figure 36.
14 14
HOURLY COMPENSATION & EMPLOYMENT COST INDEX
(yearly percent change)
12 12

Hourly Compensation: Nonfarm Business

10 ECI: Private Industry Workers 10

8 8

6 6

4 4

Q3
2 2

0 0

yardeni.com
-2 -2
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Source: Bureau of Labor Statistics.

Page 18 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 37.
8.6 8.6
ATLANTA FED’S MEDIAN WAGE GROWTH TRACKER
8.2 8.2
(yearly percent change)
7.8 7.8
7.4 7.4
7.0 Wage Growth Tracker* 7.0
Average Hourly Earnings**
6.6 6.6
6.2 6.2
5.8 5.8
5.4 5.4
5.0 5.0
4.6 4.6
Oct
4.2 4.2
3.8 3.8
3.4 3.4
3.0 3.0
2.6 2.6
2.2 2.2
1.8 1.8
1.4 1.4
yardeni.com
1.0 1.0
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23

* Three-month moving average of median wage growth.

** Production & Nonsupervisory Workers.
Source: Bureau of Labor Statistics and Federal Reserve Bank of Atlanta.

Figure 38.
8 8
ATLANTA FED’S MEDIAN WAGE GROWTH TRACKER*
(yearly percent change)
7 7
Job Switcher
Job Stayer
6 6

5 5

4 4
Sep
Sep
3 3

2 2

yardeni.com
1 1
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

* Three-month moving average of median wage growth.

Source: Bureau of Labor Statistics and Federal Reserve Bank of Atlanta.

Page 19 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 39.
16 16
CONSUMER PRICE INDEX & UNEMPLOYMENT RATE
14 14

12 12
Unemployment Rate
(percent)
10 Core CPI* 10
(yearly percent change)

8 8

Oct
6 6

4 4

2 2
Sep

yardeni.com
0 0
58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Excluding food and energy.

Note: Shaded areas denote recessions according to the National Bureau of Economic Research.
Source: Bureau of Labor Statistics and Bureau of Economic Analysis.

Figure 40.
15 15
NONFARM BUSINESS: IMPLICIT PRICE DEFLATOR & HOURLY COMPENSATION
(yearly percent change)

Nonfarm Business
10 Implicit Price Deflator 10
Hourly Compensation

5 5

Q3
0 0

-5 -5
48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Source: Bureau of Labor Statistics.

Page 20 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 41.
5 5
CONSUMER PRICE INDEX: JAPAN
(yearly percent change)
4 4

CPI Inflation
Headline (0.1)
3 3
Core* (-0.3)

BOJ’s Inflation Target

2 2

1 1

0 0
Sep

-1 -1

-2 -2

yardeni.com
-3 -3
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

* Excluding energy, food, alcohol.

Source: Ministry of Internal Affairs and Communications.

Figure 42.
4.5 4.5
CONSUMER PRICE INDEX: EUROZONE
(yearly percent change)
4.0 4.0

3.5 3.5

3.0 3.0

2.5 2.5
ECB’s Inflation Target
2.0 2.0

1.5 1.5

1.0
CPI Inflation 1.0
Headline
Core*
.5 .5

.0 .0
Oct
-.5 -.5

yardeni.com
-1.0 -1.0
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

* Excluding energy and unprocessed food.

Source: Haver Analytics.

Page 21 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 43.
5.5 5.5
PERSONAL CONSUMPTION EXPENDITURES DEFLATORS
5.0 (yearly percent change) 5.0

4.5 4.5

4.0 4.0
PCED
3.5 Headline 3.5
Core*
3.0 3.0

2.5 2.5
Fed’s Inflation Target
2.0 2.0

1.5 1.5
Sep
1.0 1.0

.5 .5

.0 .0

-.5 -.5

-1.0 -1.0
yardeni.com
-1.5 -1.5
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

* Excluding food and energy prices

Source: Bureau of Economic Analysis.

Figure 44.
3600 6.8
11/5
11/4
3400 S&P 500 INDEX & QE 6.4

3200 QE1 QE2 QE3 6.0

3000 5.6
5.2
2800
4.8
2600
4.4
2400
4.0
2200
3.6
2000 S&P 500 Index
3.2
1800
2.8
US Treasuries
1600 + Agency Debt 2.4
1400
+ MBS
(trillion dollars) 2.0
1200 1.6
1000 1.2
800 .8
yardeni.com
600 .4
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Note: QE1 (11/25/08) = Fed starts buying $1.24tn in mortgage securities. QE1 expanded (3/16/2009) = Fed starts buying $300bn in Treasuries.
QE2 (11/3/10) = Fed starts buying $600bn in Treasuries. QE3 (9/13/12) = Fed starts buying $40bn/month in mortgage securities (open ended).
QE3 expanded (12/12/12) = Fed starts buying $45bn/month in Treasuries.
Source: Federal Reserve Board and Standard & Poor’s.

Page 22 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 45.
990 990
890
CONSUMER PRICE INDEX & PERSONAL CONSUMPTION EXPENDITURES Sep 890
(indexed 1959 =100, ratio scale)
790 790
690 Sep 690

590 590
Headline
490 Consumer Price Index 490
Personal Consumption
390 Expenditures Deflator 390

290 290

190 190

yardeni.com
90 90
58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Source: Bureau of Economic Analysis and Bureau of Labor Statistics.

Figure 46.
990 990
890
CONSUMER PRICE INDEX & PERSONAL CONSUMPTION EXPENDITURES 890
Sep
(indexed 1959 =100, ratio scale)
790 790
690 Sep 690

590 590
Ex Food & Energy
490 Consumer Price Index 490
Personal Consumption
Expenditures Deflator
390 390

290 290

190 190

yardeni.com
90 90
58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Source: Bureau of Economic Analysis and Bureau of Labor Statistics.

Page 23 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 47.
8 8
CONSUMER PRICES
(yearly percent change)
7 7

6 6
Headline Inflation
5 CPI 5
PCED*
4 4

3 3

2 2
Sep
1 1

0 0

-1 -1

-2 -2

yardeni.com
-3 -3
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

* Personal consumption expenditures deflator.

Source: Bureau of Economic Analysis and Bureau of Labor Statistics.

Figure 48.
6.5 6.5
CONSUMER PRICES
6.0 (yearly percent change) 6.0

5.5 5.5

5.0 5.0

4.5 4.5
Core Inflation*
4.0 CPI 4.0
PCED**
3.5 3.5

3.0 3.0

2.5 2.5

2.0 2.0
Sep
1.5 Sep 1.5

1.0 1.0
yardeni.com
.5 .5
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

* Excluding food and energy.

** Personal consumption expenditures deflator.
Source: Bureau of Economic Analysis and Bureau of Labor Statistics.

Page 24 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 49.
5.0 5.0
CONSUMER PRICE INDEX
4.5 (yearly percent change) 4.5
CPI Inflation
4.0 4.0
Rent of Shelter
Core Excluding Shelter
3.5 3.5

3.0 3.0

2.5 2.5

2.0 Sep 2.0

1.5 Sep 1.5

1.0 1.0

.5 .5

.0 .0

-.5 -.5
yardeni.com
-1.0 -1.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Bureau of Labor Statistics.

Figure 50.
12 12
CONSUMER PRICES
(yearly percent change)

Medical Care Services

CPI
9 9
PCED*

6 6

Sep

3 3
Sep

yardeni.com
0 0
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

* Personal consumption expenditures deflator.

Source: Bureau of Labor Statistics.

Page 25 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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 Predicting Inflation
Figure 51.
4.5 4.5
CONSUMER PRICES
(yearly percent change)
3.5 3.5
Sep
Consumer Durable Goods
2.5 CPI 2.5
PCED*
1.5 1.5

.5 Sep .5

-.5 -.5

-1.5 -1.5

-2.5 -2.5

-3.5 -3.5

-4.5 -4.5

yardeni.com
-5.5 -5.5
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

* Personal consumption expenditures deflator.

Source: Bureau of Economic Analysis and Bureau of Labor Statistics.

Figure 52.
6 6
PERSONAL CONSUMPTION EXPENDITURES DEFLATOR
(yearly percent change)

5 5

4 4
Core PCED
Official
Market Based*
3 3

2 2

Sep
Sep

1 1

yardeni.com
0 0
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

* Market-based PCE is a supplemental measure that is based on household expenditures for which there are observable price measures. It excludes
most implicit prices (for example, financial services furnished without payment) and the final consumption expenses of nonprofit institutions
serving households.
Source: Bureau of Economic Analysis.

Page 26 / November 6, 2020 / Chapter 4 Charts: Predicting Inflation Yardeni Research, Inc.
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