The Fed's Inflation Nowcasting Tool
Does waiting 30 days for a government report seem a bit unreasonable? After all, we live in a world of instant messages and real-time quotes. Why should we wait a whole month between updates on the Consumer Price Index to see what's going on with inflation?
Well, you don't. If you're an economics geek like me, here's a secret tool you may not know. If economics is not your thing, know that I'm keeping close tabs on this stuff.
The Cleveland Fed has a tool called Inflation Nowcasting, which provides daily updates on inflation. Much like the Atlanta Fed's GDPNow forecasting model, it provides a real-time snapshot of gross domestic product.
For July, the Inflation Nowcasting forecasts that prices will rise 0.27% from a month earlier. That would be the smallest month-over-month gain since January 2021. For August, it’s showing an increase of 0.32%. How will the financial markets react if inflation starts to trend lower?
It’s important to point out that forecasting tools are based on assumptions and subject to revision without notice. In some instances, they may not materialize at all.
Real-time reports are nothing new, but it’s great to see that the Fed is starting to get more instant updates on the economy. And it’s information that’s available to all of us. You have to know where to look.