Inflation Monitor November 2014


inflation monitor


IAG Inflation Monitor – October 31, 2014Inflation
IndexValue1mo change1yr change5yr changeInflation Score
Economic Inflation
Consumer Price Index (CPI)238.030.08%1.83%10.27%3
Producer Price Index (PPI)206.50-0.15%1.28%18.61%3
1 Yr Treasury Bill Yield0.
10 Yr Treasury Note Yield2.30-0.24-0.32-1.09%4
Real Interest Rate-1.72-0.13-0.66-3.412
US 10 yr TIPS0.38%-0.08-0.05-1.102
ISM Manufacturing Index59.004.24%4.24%5.36%4
Capacity utilization79.300.63%1.28%15.90%3
Industrial Production Index105.070.92%4.32%22.18%4
Personal Expenditure Consumption Index109.150.08%1.43%8.66%3
Rogers International Commodity Index3220.01-1.68%-8.89%9.28%2
SSA COLA0.00%1.50%3
Median Income65583.000.16%1.57%3
Real Median Income519390.35%-4.563
Consumer Interest in InflationMild Deflation2
IAG Inflation CompositeMild Deflation2
IAG Online Price Index-0.43%2.12%2
US GDP17535.401.20%3.93%21.91%4
S&P 5002018.052.32%14.89%94.76%4
Market Cap to GDP126.20%120.10%106.30%78.40%5
IAG Economic Inflation Index* Stable3
Housing Inflation
Median Home price209,700.00-3.98%5.64%19.08%2
30Yr Mortgage Rate4.04%-0.12-0.15-0.913
Housing affordability157.601.22%-1.44%2
US Median Rent756.002.72%5.57%3
IAG Housing Inflation Index*Mild Deflation2
Monetary Inflation
US Govt debt held by Fed (B)2,705.903.49%39.72%312.17%1
US Debt as a % of GDP (B)101.76-1.63%1.29%26.41%3
M2 Money Stock (B)11,437.300.48%6.25%36.62%4
Monetary Base (B)4,018.62-1.31%11.31%104.58%4
Outstanding US Gov’t Debt (B)17,632,6060.18%5.34%52.73%4
Total Credit Market Debt (B)57,538.860.79%3.58%9.54%3
Velocity of Money [M2]1.53-0.20%-2.36%-10.41%2
US Trade Balance-43,032.007.60%1.82%24.76%3
Big Mac Indexmild inflation4
US Dollar87.061.18%8.36%13.76%2
IAG Monetary Inflation Index*Stable3
Electricity (cents / KW hour)13.01-0.31%4.00%3
Coal (CAPP)2.250.00%-12.79%-1.75%1
Natural Gas3.87-6.35%8.20%-23.35%2
IAG Energy Inflation Index*mild deflation2
Food and Essentials
Orange Juice13565-6.38%10.60%17.50%2
CRB Foodstuffs Index397.90-5.97%3.47%22.22%2
IAG Food and Essentials Inflation Index*mild deflation2
Construction and Manufacturing
CRB Raw Industrials506.29-1.00%-1.66%14.22%3
Total Construction Spending (M)950,920.00-0.45%2.90%7.89%3
IAG Construction & Manufacturing Index*Stable3
Precious Metals
IAG Precious Metals Inflation Index*Deflationary2
Innovative Advisory Group Index
IAG Inflation Index Composite*mild deflation2

* If you would like a description of terms, calculations, or concepts, please visit our Inflation monitor page to get additional supporting information. We will continually add to this page to provide supporting information.

* Our Inflation Score is based on a proprietary algorithm, which is meant to describe the respective category by a simple number. The scores range from 1-5. One (1) being the most deflationary. Five (5) being the most inflationary. These scores are meant to simplify each item and allow someone to quickly scan each item or section to see the degree of which inflation or deflation is present.

* We have also added our own indexes to each category to make it even easier for readers to receive a summary of information.

Inflation Deflation Composite Ranking

inflation deflation

* The Inflation Equilibrium is a quick summary for the whole data series of the inflation monitor. If you don’t like statistics, this is the chart for you.


Inflation Monitor November 2014 – Introduction

This is the second issue of the Innovative Advisory Group Inflation Monitor. We have received a lot of positive feedback on our first issue of that Inflation Monitor. As you will notice, we have taken some of this feedback and made some minor adjustments to our issue this month. As always, please contact me to send your feedback on how I can make this monthly Inflation monitor a better tool or resource for you.

This month I have added the following indicators:

  • The Rogers International Commodity Index®,
  • US 10 year TIPS,
  • Personal Expenditure Consumption Index,
  • Real median income to the list for reference.
  • US Debt as a percentage of GDP

In this month’s issue, I will be discussing Japan, Deflation, US Oil production, Gold, and Silver. Given the most recent US market sell-off, I think it would be a good time to discuss the other side of inflation… Deflation.

Thank you for reading and I hope you enjoy this month’s issue – Inflation Monitor November 2014.

Kirk Chisholm

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Charts of the month

Oil Prices

Oil prices
20 years of oil prices, this recent drop in prices doesn’t look good.


Oil prices have been dropping for the past few months. This is a positive for corporate earnings due to lower transportation costs. However, this should be a negative for oil and oil service companies. Lower prices will cause companies to reduce or stop the production of oil. Eventually, this will cause the prices to rise again. However, the US has been going through an oil production boom not seen in decades due to the new fracking technology allowing companies to productively drill for oil in the US again. Here is the US production of oil in the past 10 years.

US Oil Production

US oil production
US oil production is on the rise


The Gold Price Today

gold price today
Do gold prices indicate inflation or deflation?

Gold and silver have been historically seen as money. This has been the case for thousands of years. Only recently has gold been disassociated with the value of money when Richard Nixon took the US off the gold standard. Regardless of the opinion of the US government and the Federal Reserve on the value of gold and silver, they are still seen as money around the world. A rising price of gold and silver in relation to the US Dollar tends to be inflationary, and a falling price tends to be deflationary. Only time will tell which direction the price of gold will move. Silver, on the other hand, looks a bit weaker. However, it is also an industrial metal.

The Silver Price Today


Silver Price today
Do silver prices indicate inflation or deflation?


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The IAG Inflation Monitor – Subscription Service

We are initially publishing this Inflation Monitor as a free service to anyone who wishes to read it. We do not always expect this to be the case. Due to the high demand for us to publish this service, we plan to offer it free for a while and when we feel we have fine tuned it enough, we do plan on charging for access. Our commitment to our wealth management clients is to always provide complimentary access to our research. If you would like to discuss becoming a wealth management client, feel free to contact us.


  1. Federal Reserve – St. Louis
  2. U.S. Energy Information Administration
  3. U.S. Post Office
  4. National Association of Realtors
  5. The Economist
  6. The Commodity Research Bureau

* IAG index calculations are based on publicly available information.

** IAG Price Composite indexes are based on publicly available information.


About Innovative Advisory Group: Innovative Advisory Group, LLC (IAG), an independent Registered Investment Advisory Firm, is bringing innovation to the wealth management industry by combining both traditional and alternative investments. IAG is unique in that we have an extensive understanding of the regulatory and financial considerations involved with self-directed IRAs and other retirement accounts. IAG advises clients on traditional investments, such as stocks, bonds, and mutual funds, as well as advising clients on alternative investments. IAG has a value-oriented approach to investing, which integrates specialized investment experience with extensive resources.

For more information, you can visit

About the author: Kirk Chisholm is a Wealth Manager and Principal at Innovative Advisory Group. His roles at IAG are co-chair of the Investment Committee and Head of the Traditional Investment Risk Management Group. His background and areas of focus are portfolio management and investment analysis in both the traditional and non-traditional investment markets. He received a BA degree in Economics from Trinity College in Hartford, CT.

Disclaimer: This article is intended solely for informational purposes only, and in no manner intended to solicit any product or service. The opinions in this article are exclusively of the author(s) and may or may not reflect all those who are employed, either directly or indirectly or affiliated with Innovative Advisory Group, LLC.

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