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The numbers I'm presenting here represent the total of 3 polls, one of which was posted on this board. I should note that there was very little difference in results from board-to-board, although Mishedlo board had the widest range of results in all categories.

Based on the results, there appears to be a bias toward the low end of the ranges.

45% of respondents use a range which corresponds to the average inflation rate from 1913 through 2004, which was 3.42%.

30% of respondents use a range which corresponds to the period of 1914-1959, which averaged 2.57%.

2% (2 respondents) use a range that corresponds to the period of 1921-1940, the only extended period in which the inflation rate was below 2% (and actually was negative). This included the period of The Great Depression.

Therefore, a full 32% are using estimates that are well below the historical average.

Only 18% of the respondents are using a range that corresponds to the most current extended period, 1960-2004, which averaged 4.28%.

6% use a range above 4.75%, which occurred during 3 non-consecutive decades, the teens, the 40s, and the 70s.

When compounding inflation rates over time, even a ¼ percentage rate difference can make quite a large difference, while ½ percent could mean the difference between running out of money 10 years before one expects, or having something left after all.

Any thoughts as to why so many might be underestimating future inflation rates?

2old
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