Forget the Joneses. When it comes to saving for retirement, what investors really need is to keep up with inflation. Because bit by bit, year by year, inflation steals away our purchasing power.
Posts tagged ‘inflation’
Everybody loves cheap money, right? Well, if you’re a borrower, you’ve definitely benefited from actions taken by the Federal Reserve to keep interest rates at record lows.
If you’re looking for a gauge on U.S. inflation, you’ve got two primary options. There’s CPI – the consumer price index. And there’s PCE – personal consumption expenditures. Both CPI and PCE serve as broad measures of inflation (i.e. how much prices are going up on consumer goods and services). That’s useful information if you’re trying to predict economic activity, because rapid and unexpected inflation can be bad for economic growth. So, what would you say if I told you that while CPI and PCE generally track in the same direction, there is a difference between the two estimates? And what if I told you that in March 2013, that difference hit its highest level since the start of the 2008-2009 recession? In March, core CPI showed 1.9% year-over-year growth, while core PCE showed a 1.1% increase over the same period. Sure, it’s only a difference of 0.8%, but 0.8% could mean the difference between extending quantitative easing and wrapping it up. 0.8% could mean the difference between projected growth and a return to recession. Read more