Matt Blackman

What Was Last Quarter's GDP and Inflation Rate?

Here is the reason. The government reverse engineers CPI and PCE data to give the desired result. After all this is an election year and the incumbent party whether Republican or Democrat, have shown a remarkable ability to juice the economy leading up to each election. Statistics are a big part of this task. History has shown that a party heading into an election with an unhappy or unemployed voter have a snow-ball's chance in hell of getting re-elected. As a result the NBER (and Commerce Department) won't confirm we are in an election till after the election since this would make the chances of a Republican win even slimmer.

This explains why 93% of all Dow gains have occurred in the 26 months leading up to elections compared to just 7% in the 22 months after.

CPI and PCE show little basis in reality.

Conclusion? Investors relying upon CPI or PCE to make investment decisions do so at their peril.