While I do not agree with the current readings of the measure – I think the measure dramatically understates the probability of deflation, as measured by the CPI – the Federal Reserve Bank of Atlanta maintains an interesting data series titled “Deflation Probabilities.”
As stated on the site:
Using estimates derived from Treasury Inflation-Protected Securities (TIPS) markets, described in a technical appendix, this weekly report provides two measures of the probability of consumer price index (CPI) deflation through 2023.
A chart shows the trends of the probabilities. As one can see in the chart, the readings are volatile.
As for the current weekly reading, the June 10, 2019 update states the following:
The 2019–24 deflation probability was 3 percent on June 7, up from 2 percent on May 29. The 2018–23 deflation probability has remained at 0 percent through June 7 after falling from 5 percent to 0 percent on February 13 following the release of the Consumer Price Index (CPI) from the U.S. Bureau of Labor Statistics and the incorporation of revised seasonal adjustment factors for the CPI. These deflation probabilities, measuring the likelihoods of net declines in the Consumer Price Index over the five-year periods starting in early 2018 and early 2019, are estimated from prices of the five-year Treasury Inflation-Protected Securities (TIPS) issued in April 2018 and April 2019 and the 10-year TIPS issued in July 2013 and July 2014.
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I post various economic indicators and indices because I believe they should be carefully monitored. However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 2879.84 as this post is written
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