Inflation is turning higher, and that could bring concerns for the bull market. My colleagues have wrote about the issues inflation can bring: higher costs, reduced growth, etc.

But I wanted to show you a couple charts today that depict inflation is turning up, and how that paints an ominous sign we are on the path toward the next Great Recession.

Surging Inflation

The first chart, showing three measures of inflation, indicates each is turning higher over the last six months.

3 Measures Inflation Chart

This reinforces what we all see starting to happen — higher prices.

Tariffs, more growth and higher wages will all help push prices higher, and this chart signals we are seeing just that.

But what’s the real harm with rising inflation?

After all, growth and wages, two key factors into higher prices, are great for the economy.

The problem is that inflation is created because the economy is overheated, meaning it is running hotter than it should be. That’s why we see inflation shoot up. Demand for goods and services outstrips supply, which means our growth is more than enough.

Here’s a long-term chart of those same inflation measures, just to show the run-up in inflation before every single recession.

Long-Term Inflation Chart

The latest push higher in inflation will end the same way — with another recession.

It’s only a matter of time.

Based on my article I’ll post Monday, I think we have a couple years for the bull market to last.

Over that time, we’ll see the surge higher in inflation, and those issues will spark the next Great Recession.


Chad Shoop, CMT

Editor, Automatic Profits Alert