Retire With Purpose - The Retirement Podcast 516: Mind the Inflation Gap: Why Forecasts Fail and How to Hedge Smart
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Aug 15, 2025 Inflation's unpredictability challenges traditional forecasts. Discover how real assets like real estate and commodities can effectively hedge against inflation. The podcast explores the disconnect between consumer and professional inflation expectations, emphasizing the importance of diversification. Bitcoin's role as 'digital gold' is examined amidst its volatility, raising questions about its reliability. Listeners gain insights on integrating commodities into portfolios and strategic financial planning for retirement.
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Inflation Gap Defined And Unreliable Forecasts
- The inflation gap is the difference between expected inflation and what actually occurs.
- Both consumers and professionals repeatedly miss actual inflation, so forecasts are unreliable.
Consumers Are Volatile And Often Wrong
- Consumer inflation expectations have been unusually volatile and recently reached multi‑year highs.
- Historical surveys show expectations often diverge greatly from realized inflation.
Forecast Correlations Are Weak
- Correlation coefficients show weak links between forecasts and actual inflation.
- Consumer correlation ~0.20 and professional ~0.34 mean forecasts explain little of actual inflation variation.
