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There's a saying that if you can visualize data it's easier to digest and conceptualize. There are 2 major things occurring in this graph regarding monthly CPI. Firstly, that slope for 2021. Yikes. But let's take a step back further in time to March 2020. I have circled it in red on the graphic below.
What is it happening there that we have not seen in any 12 month period prior from 2017 to present on this graph?
The orange line representing 2020 CPI is touching the the blue 2019 line for CPI. And while we have all grown accustomed to social distancing, this is an important event to note. We don't see that happening elsewhere in the 5 years depicted on this graph. That event is an indicator that our economy lost an entire year of growth in that short span.
Why is this relevant?
We are currently measuring a growing economy with an upward slope against a practically horizontal line (or zero slope) juxtaposed with a 2% trendline for comparison. Real numbers are 0.64% for 6 months growth from August 2020 to January 2021, or about half the rate of what is considered healthy growth over that same period coupled with 6 months prior it took to regain position from February 2020 to July 2020.
Finally, take this next part with a huge grain of salt as there are a lot of assumptions drawn in (and is more of a statistical inference). Had our economy grown linearly in 2020 at steady 2%, our inflation for December 2021 would be 5.67%.
This is one of my favorite intuitions on my recent CPI research I compiled. Here we are looking at your monthly growth data points (how much CPI has moved from the previous period) and 2 derivative statistics. 12 month moving average and the TTM spread. Our 12 month moving average is an indicator of vector. Generally it answers the question are we going up or down? The TTM Spread is my favorite. It is the absolute value of the difference between the 12 Month MA and Growth data point averaged over the previous 12 months. This tells us volatility. The further the Spread number is away from 0 the greater change we should expect.
One could argue you could use standard deviation here. And you could. I personally prefer the Spread value here that gives a numerical degree of change whereas a TTM standard deviation would generally show inversely to the moving average.
What are some of your thoughts on this method? Yay, nay?
“The uptick in electric car sales caused a 12% drop in average CO2 emissions of new cars sold in Europe last year, compared with in 2019, reversing a trend that had seen such emissions increase for three consecutive years.”
EVs have been a focal point of case study for my MBA program. While I personally view the emissions reduction as a great trend indicator and selling point, here in America winning the hard sell will be done through brand recognition and independence through decentralization of our economy. Ford has stormed the market with it’s EV F-150. I feel they have the best #SCM to scale. Tesla has a great niche product but not nearly the same resources as the big 3–especially Ford Motor Company. They are beginning the race for California which has plans to phase out gas powered car sales by 2035 — roughly 11% of the market
As far as decentralization is concerned, many consumers yet to adopt worry about infrastructure. While there is a need to develop, one major intuition is missing from this concern: our homes can be charging stations. Most EVs live in the 250-300 miles per charge range. For average consumers that is well within the daily average commute (sources vary by location but range from 15-50 miles one way).
We will always have a demand for offsite charging (“refueling”) in the commercial long haul and private travel space on top of local supplemental charging stations. But I foresee a huge decentralization and increase in American consumer independence as a result of the EV movement. We charge our smartphones every night after living with Nokia bricks that lasted for days for a decade. I think we will adapt.
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