US Inflation to Drop to 4.3% Next Month: Insights from CPI and Predictive Model

The U.S. CPI came out yesterday showing inflation at 4.9%. Our predictive model, based on the aggregate inflation forecasts from news and social media, shows a further significant inflation drop over the next month to 4.3%. This model has consistently had a 30% tighter fit to the U.S. CPI than the consensus of experts since it began rolling-forward (expanding window architecture) in 2004.

Once interest rate expectations plateau, then the market may resume its upwards drift.