An update on the most-important chart in the economic world

<p>I have showed this chart before because it shows how the CPI chart laps some very easy comps soon.</p><p>What has emerged, pointed out by <a href="https://twitter.com/fcastofthemonth/status/1681802018070081536" target="_blank" rel="nofollow">Omair Sharif</a>, is that the numbers used on the chart are non-seasonally adjusted, which isn't what is commonly (universally, frankly) used for the m/m CPI numbers.</p><p>What it showed was that even if CPI ran at 0.2% m/m until January, the year-over-year reading would rise to 3.9%.</p><p>This is problematic for two reasons:</p><p>1) If you use the standard seasonally-adjusted numbers, a 0.2% m/m reading would get CPI back to 2.5% in January.</p><p>2) If you insist on using non-seasonally-adjusted numbers, there's a strong downward bias late in the year (because price hikes are usually done at the turn of the year). </p><p>Here is what the chart (by <a href="https://twitter.com/pd_caldwell" target="_blank" rel="nofollow">Preston Caldwell</a>) shows if re-done for the standard seasonally-ajdusted numbers.</p><p>By that measure, a 0.2% m/m reading would be fine for getting CPI on track, especially considering that in March of 2024, the y/y comps begin to get easier. </p><p>The takeaway here is that we're closer to 2% than it seems and it's what the market is implying. That could change if the combo of housing, commodity prices and wages pickup but a 0.2% SA m/m reading is a fine baseline with what we know about the economy.</p>

This article was written by Adam Button at www.forexlive.com.