The S&P 500 adjusted for inflation

S&P 500 in both nominal and real terms,  1983 to 2013

Lots of happy news last week about The S&P 500 following the Dow Jones 30 Industrials and hitting record highs. Or did it?

The chart above shows two series, the S&P 500 in nominal terms and the S&P 500 in real terms. The difference? Nominal measures a “stated” rate, while real is “adjusted for inflation” and the difference is key. Inflation matters, after all, nobody would dismiss the effect of inflation upon energy prices or the value of tangible real estate.

In real terms the S&P 500 is by no means trading at record highs. Not the happy news the media likes to push upon us, now is it?

1 comment to The S&P 500 adjusted for inflation