Indicators · Public finances and policy
Long-run inflation expectations
Normal Context
2.17%, down 18 basis points over a month, as of 6 Nov 2026.
Expected inflation is lower than 68% of the readings since 2003.
US recessions Periods when this signal was on
What it measures
The inflation rate US markets expect for the five years that start five years from now.
Why it matters
If expectations fall and prices then fall, debts become heavier and real interest rates rise when they need to fall, as in the 1930s. If expectations rise, markets doubt that inflation will be held down.
When it triggers
Triggers on a large move within a month (at least 0.3 percentage points, more when markets are volatile), or when expectations leave the range 1.5–3%.
Where it fits
The policy response. The argument predicts: Tariffs, spending cuts as unemployment rises, and inflation expectations moving outside their usual range.
Other possible causes. In calm times, tariffs and expected inflation move for reasons unrelated to the argument.
When the rule was set
The rule was set on 24 Sep 2026, when it was not triggered.
How often it has been on
Applied to past data at the end of each month from Apr 2003, using only what had been published by then, it was on in 4% of months to 2019 and 6% since 2020. More than six months from any US recession as dated by the National Bureau of Economic Research, it triggered in Oct 2003 and Jun 2016. The rule was set with these years in view, so these figures cannot show how well it predicts.
Past triggers
On the data published at the time, it triggered in Oct 2003, Oct 2008, Jun 2016 and Feb 2020.