At this point, Wall Street is understandably jittery about the veracity of government inflation data. Most recently, it has been bracing for the new CPI report, which is set to come out this week. No surprise, then, that analysts and investors are poring over this report. They understand how high inflation can severely alter the playing field and influence the path of monetary policy. Jeff Cox, a contributor for CNBC, has recently called attention to these troubling issues. He amplifies the growing importance and impact of dependable data in creating sound economic forecasts.
On that last point, the CPI report coming out soon will tell us if inflation is heading back up. Not only is this report an important economic bellwether, watched by economists and policymakers to gauge overall economic health, its accuracy is of utmost importance. Even investors are nervous this go ’round, given that the government has played fast and loose with data in the past, casting some doubt on its veracity. The prospects of such threats can drive uncertainty into financial markets, causing investors to be risk-averse.
Our friend Jeff Cox has written extensively about the consequences of the worst inflation data in our history. This is where he helps CNBC and the public by illustrating how American consumers’ perspectives on inflation are shaping their consumer habits. This, in turn, disrupts market forces. This is why so many on Wall Street resonate with his views. They look for unmistakable indicators of stability in the face of continuing economic turmoil.
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Jeff Cox is one of the most interesting and accessible public intellectuals on social media. He answers questions from his followers and provides his insights on significant market developments. You can reach him on Facebook at Jeff Cox on Facebook. To follow along live and engage with one of the brightest minds on Wall Street, visit his Twitter handle, JeffCoxCNBCcom. These channels allow him to discuss pertinent issues such as the current anxieties surrounding inflation data and its potential impacts on the economy.
As Wall Street looks ahead to the next CPI report, issues of data reliability are still top of mind. They are acutely aware that high-quality inflation measures are a necessity for developing successful long-term investment strategies. The next inflation report will affect not just the mood on Wall Street, but will shape the Federal Reserve’s decisions about monetary policy.
Fears that the government’s inflation data is wrong have grown. The last few times they’ve adjusted this data it has led to surprise market turmoil. Economists say that a tremendous lack of transparency in how these numbers are calculated can only breed skepticism. Consequently, there is a growing chorus among market participants calling for more rigorous methodologies to guide the collection and reporting of data.
The Federal Reserve isn’t the only one who has been feeling the heat to get their inflationary policies in check. National interest rates are already at rock bottom levels. Should inflation be more stubbornly persistent, the monetary authority will have to adopt a different approach. Investors are particularly attuned to signals that could suggest a shift in monetary policy that might affect borrowing costs and economic growth.