Inflation uncertainty in the United States is at its highest point since the economic recession of 1982.
The data They note that American consumers expect “prices to increase at an annual rate of 3.3% over the next 5 to 10 years, the highest since the 2008 financial crisis.” This figure represents an increase compared to the 3.0% estimated in December and the 2.3% recorded in the first quarter of 2020.
In the graph below, prepared by specialists from The Kobeissi Letter newsletter, the vertical axis shows the level of uncertainty, calculated as the difference between the 75th and 25th percentiles of inflation expectations. In simple terms, reflects the variability in consumer opinions about future inflation.
The black line represents the uncertainty for one year, while the red line illustrates the uncertainty projected for a horizon of 5 to 10 years.
As seen in the chart, “Americans now expect prices to rise 3.3% over the next 12 months, up from 2.8% in December 2024.”
For their part, The Kobeissi Letter analysts warn that “uncertainty around the trajectory of inflation over the next 5 to 10 years has reached its highest levels since the 1980s” and the levels of this indicator are 3 times higher than the average prior to the COVID-19 pandemic.
This indicator is used to understand how inflationary expectations affect consumer confidence and their behavior when spending or saving money.
Next Wednesday the Consumer Price Index (CPI) will be published, which measures variations in the prices of goods and services over time. According to market forecasts, a monthly increase of 0.2% in inflation is expectedwhich would bring the interannual rate to 2.9%.
The new CPI data will be key for the Federal Reserve (Fed), the central bank of the United States, define what your monetary policy will be and whether you will make a new interest rate cut. Currently, it revolves around 4.25% and 4.50%.
The decision will be announced on January 29 and, as of today, there is a 97% chance that interest rates will stay the same. This is indicated by the expectations survey of the CME FedWatch.
On January 20, Donald Trump will be inaugurated as president of the United States and The markets are waiting to see what the first moves he will make and how they will impact the economy.
This is important because the measures could impact the Fed’s decision whether or not to cut the interest rate.
When the Fed reduces the interest rate, borrowing costs decrease and investors have incentives to take loans and place them in assets considered risky such as stocks, bitcoin (BTC) and cryptocurrencies, to obtain better returns.
On the contrary, when the interest rate rises, Investors seek refuge in Treasury bondsknown to be a safe investment.
However, it should also be mentioned that in times of economic uncertainty other They decide to place their money in BTC as an anti-inflationary alternative in the medium and long term, which traditional assets do not offer.
Its inherent scarcity is what differentiates the currency created by Satoshi Nakamoto from fiat money, which is constantly devalued by the political decisions of a government or central banks.
