A New Inflation-Adjusted High?

The S&P 500 may have closed at an all-time inflation-adjusted high today. The problem is we can’t say for sure until the CPI data for February comes out in about five weeks.

Here’s how it works. The S&P 500 made its all-time inflation-adjusted high on March 23, 2000 at 2,099.30 (1,527.35 nominal). That’s actually one day before the nominal high. That figure is as of the last CPI data point which is for December 31, 2014.

The CPI for December was 234.812. Here’s the catch: The CPI has been falling lately thanks to lower oil. As a result, the all-time inflation-adjusted high has been falling as well.

Today’s close was 2,088.48. That’s 0.52% below the inflation-adjusted high. So the question is, have prices deflated that much so far this year? I don’t know. The January CPI comes out in two weeks.

The blue line is the CPI (not seasonally adjusted). I added the red dot as the tipping point. If the blue line has trended down BELOW the red dot, then today’s close is an all-time inflation-adjusted high. If the blue line has trended above the red dot, then we’re still short of it.

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Posted by on February 12th, 2015 at 4:14 pm


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