Inflation expectations jump 5.2% – New York Fed

TradingEconomics/Staff/9-13-2021

“US consumers’ inflation expectations for the year-ahead increased for the 10th straight month to 5.2% in August of 2021, a new series high, driven by food (+0.8 percentage point to 7.9%); rent (+0.2 percentage point to 10%); medical care (+0.2 percentage point to 9.7%), and gas (+1.1 percentage points to 9.2%). In contrast, the expected price of college education decreased by 0.5 percentage point to 7. Home price growth expectations continued to moderate but remain elevated (5.9% vs 6%). Meanwhile, inflation expectations at the three-year horizon also increased by 0.3 percentage point to a new record high of 4%.”

USAGOLD note: Inflation expectations are part of the standard real rate of return formulation. This high expectations number is going to throw most yield investments into a negative real rate of return.