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The S&P 500 is up 31% compared to a year ago, and the US Consumer Price Index has only increased 5.4% over the same time period.

krrrh 5y ago
I know it’s almost becoming a cliche to post the “chart of the century”, but CPI is not effectively capturing inflation. The money has to go somewhere. https://www.aei.org/carpe-diem/chart-of-the-day-or-century-3/ https://www.aei.org/carpe-diem/chart-of-the-day-or-century-3...
- adam_arthur 5y ago
  Rents up 15% YTD nationally, while CPI shows something like 3%. There are a long list of reasons why, but the rent factor in CPI is likely to produce a few percent gain on it's own, given it's weighting in the measure. (CPI lags market)
- enraged_camel 5y ago
  Is there a version of that chart that includes 2021?
est31 5y ago
The CPI just lags behind. The signs point towards further price increases in the future. In some segments, we've already seen similar increases recently, or even greater ones, e.g. with GPUs or construction material.
systemvoltage 5y ago
YoY will reflect the massive crash we had last year. Compare it with 2019 levels.
- teraflop 5y ago
  No, as of 1 year ago the stock market had already recovered and exceeded its pre-pandemic levels. But sure, let's look at a few other intervals: Compared to 2 years ago, the S&P 500 is up 51%, and the CPI is up 6.8%. Compared to 3 years ago, the S&P 500 is up 63%, and the CPI is up 8.7%. etc. Even if you think the CPI is somewhat underestimating inflation, it's clear that stock prices have been rising much faster than the value of the dollar is falling.
kennethh 5y ago
Most of the new riches go to people who already have more than they need so they save it. Therefore you get asset inflation and to a lesser degree price increases in consumer goods. US Consumer Price Index is also showing less inflation than most people would experience themselves. http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts show the both the new and the old CPI inflation numbers. If price of beef increase a lot and people instead eat chicken the beef counts for less in the CPI. There is also a modifier if the the product have improved, ie the TV is a lot better than the earlier one.

krrrh 5y ago

I know it’s almost becoming a cliche to post the “chart of the century”, but CPI is not effectively capturing inflation. The money has to go somewhere. https://www.aei.org/carpe-diem/chart-of-the-day-or-century-3/ https://www.aei.org/carpe-diem/chart-of-the-day-or-century-3...

adam_arthur 5y ago
Rents up 15% YTD nationally, while CPI shows something like 3%. There are a long list of reasons why, but the rent factor in CPI is likely to produce a few percent gain on it's own, given it's weighting in the measure. (CPI lags market)
enraged_camel 5y ago
Is there a version of that chart that includes 2021?

est31 5y ago

The CPI just lags behind. The signs point towards further price increases in the future. In some segments, we've already seen similar increases recently, or even greater ones, e.g. with GPUs or construction material.

systemvoltage 5y ago

YoY will reflect the massive crash we had last year. Compare it with 2019 levels.

teraflop 5y ago
No, as of 1 year ago the stock market had already recovered and exceeded its pre-pandemic levels. But sure, let's look at a few other intervals: Compared to 2 years ago, the S&P 500 is up 51%, and the CPI is up 6.8%. Compared to 3 years ago, the S&P 500 is up 63%, and the CPI is up 8.7%. etc. Even if you think the CPI is somewhat underestimating inflation, it's clear that stock prices have been rising much faster than the value of the dollar is falling.

kennethh 5y ago

Most of the new riches go to people who already have more than they need so they save it. Therefore you get asset inflation and to a lesser degree price increases in consumer goods. US Consumer Price Index is also showing less inflation than most people would experience themselves. http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts show the both the new and the old CPI inflation numbers. If price of beef increase a lot and people instead eat chicken the beef counts for less in the CPI. There is also a modifier if the the product have improved, ie the TV is a lot better than the earlier one.