The Powerful Stagflation They Are Desperately Trying To Hide

As US government inflation figures seems to be understated by half, The Absolute GPD is finally clear. In the red, for almost three years straight.

The Great Inflation Mirage

The US Government cheers fantastic growth, but its citizens are scratching their heads. Why? The figures are deceptive, and we can prove it.

For every quarter, there is in an increasing amount of financial individuals and institutions that are joining my (Corporalis Commodis/RO) stance and take of the economy. We are becoming larger in numbers while more thorough in our take. To be fair, the less — the better, as it gives me time. After all, got gold?

What are we doing?
We are calling bullshit on government figures & economical prosperity.

• How The Bureau of Labor Statistics skews government figures

• What the ACTUAL GDP growth is since 2019

• Raising the question, a blatant error or blatant corruption?

• How the inflation is actually, and wrongfully, measured — in detail

• How this transpires over to official CPI and GDP.

• Inflation re-modeled

• Wages re-modeled

• GDP Deflator re-modeled

• Real GDP re-modeled.

• The multi-decade centralization and concentration of capital

• The multi-decade mis-allocation of capital

• How poor of a state the majority of the economy truly is

• The income illusion

• What the ACTUAL wage growth has been since 2019

• Fund flows — sectors

• Housing expenditures

• Healthcare expenditures

• How it is being underreported

• Household allocation to financials

• 100 year high stock market concentration

• Corporate insider buys SP500 at 15 year low

• The disconnect between government data and reality

• The Powerful Stagflation They Are Desperately Trying To Hide

• $3,000,000,000,000 dollars in imaginary growth.

• 150 year inflation adjusted housing prices, crushing the younger generations

• 20 year cash allocation charts for both global fund managers and global non-bank investors provided. How much of the cash is drained?

• Critical capital being diverted from essential industries that are vital for long-term economic stability

• & More

Content; 4,926 words, 30,474 characters, 17 screens/charts.
1/3 of this letter will be available for free subscribers.
Free subscribers can redeem their single-use unlock for this letter to access the full content.

This is not financial advice, and you should always do your own due diligence.
Errors may occur.

Note; If you read these letters via e-mail, I must notify you that the letters are too large for an e-mail. The better solution is to read the letters at the Substack app.

Introduction

Parts of this letter should be credited to EJ Antoni, PhD, Public Finance Economist, Research Fellow in The Heritage Foundation's Grover M. Hermann Center for the Federal Budget. His research focuses on fiscal and monetary policy. His work has been featured with a variety of news outlets including Daily Caller, Fox News and Fox Business, Wall Street Journal, National Review. This letter partially stems from his work, with my work as well. The guys over at The Heritage Foundation are great at what they do, and have tried for years to highlight the real underlying conditions of the economy, specially as of late. The 2020s.

The Heritage Foundation - Think Tank, Washington, D.C. (LINK)

The main problem, it is pseudo figures and reality has been swapped with fairy-tales. A direct result of the imaginary paper economy we have built. The question is, is this blatant ignorance, or blatant corruption?

Over the years, the accuracy of official inflation statistics has been questioned by many. From finance insiders, scholarly debates to outspoken political figures, the integrity of these inflation metrics has been scrutinized, even drawing attention from major publications. The importance of these numbers extends far beyond academia—they directly shape the public's understanding of economic growth. After all, inflation-adjusted GDP is supposed to provide a clear snapshot of real economic activity, independent of price increases. But are they? No they are not.

Here is the critical question: Are these inflation figures even accurate? If not, then the narrative of economic growth—particularly since 2019—comes into question. Are we genuinely growing, or are inflation and manipulated metrics masking economic stagnation or worse, contraction? In other terms; Stagflation.

The current “market” is just a curtain for the top 10%

Source; BofA.

If we dig into the S&P 1500 data, excluding the top 10% of companies, an unsettling picture emerges. The reality of EBIT (Earnings Before Interest and Taxes) growth shows that the bottom 90% of these firms has experienced two consecutive years of negative growth accumulation. This means that while the headlines may shout about the "robust economy," the truth is that the overwhelming majority of companies in the S&P 1500 are struggling. Growth hasn’t just stagnated—it’s been negative for two years running, with only a recent touch at the zero-growth line.

This is not just an insignificant hiccup—it’s an economic contraction in disguise, masked by the soaring fortunes of the top 10%. This skewed distribution of growth gives the illusion of a healthy economy. As I've pointed out in my earlier letters, the government figures have been misrepresenting reality, and this chart is yet another piece of evidence supporting that claim.

Let's take a closer look at the bottom 50% of companies—because their situation is even more grim — currently in sharp decline. These companies are currently in the red, with EBIT growth sitting around -15%. This speaks volumes about the dire state of smaller firms within the S&P 1500. Even worse, these aren’t the smallest of the small. Many of the truly small companies that I’ve highlighted previously aren’t even included in this data because they’re too tiny to be listed on major stock indices. This isn’t just about a few struggling firms—it’s an indication of widespread systemic issues affecting a significant portion of the U.S. economy.

The centralized economy is growing more and more concentrated, and the selective few continue to thrive while the broader base of the economy falls behind. Trillions of dollars are being funneled into the pockets of the top 10%, while the rest is scrambling to stay afloat. The middle and lower segments of the market are getting squeezed by rising costs, higher inflation, and relentless regulatory burdens. And yet, the government would have us believe that the economy is doing well, using broad averages that hide the underlying disparities. The question is, when are people going to get this — that averages can hide underlying disparities? Following mainstream financial media, and you will stay in the dark.

So, the question that comes to mind is: can we really say the economy is in good shape when only the top 10% of companies are performing well? When the bottom 90% is barely scraping by, and the bottom 50% is outright in sharp decline, what does that say about the true state of the economy? These are the companies that employ the bulk of the workforce and make up the backbone of local economies across USA. If they are suffering, the people are suffering—and no amount of statistical manipulation can hide that for long.

This disconnect between government figures and reality is precisely what I’ve been warning about in my letters. The idea that the economy is "booming" is a myth propagated by misleading averages and cherry-picked data, propped by debt. We are witnessing a concentration of wealth that mirrors the consolidation in corporate America. The top 10% are doing fine, but they do not represent the whole economy—far from it. The rest of the market is battling to scrape by, and if we continue down this path, the outcome will be a further widening of the economic divide, leaving most companies, and by extension, most people, in the dust.

Which transpires over to cumulative global sector fund flows, in to the top 10% mega caps — making tech crowded. Surprised?

Which again, bolstered by several other factors, transpires to the top 10 US companies accounting for a whopping 18% of the global equity market. At this point, why not allocate all pension funds in to one company? Amazing global risk management we are witnessing here. Surprised?

Market cap of the largest stock relative to the 75th percentile stock.
Are we still surprised?

Goldman Sachs is expecting the annualized return to shrink the next 10-15 years. Short term models is something I do not give much attention to, but long term models with cycles backing it up is both more interesting and probable, as I can see their modeling is backed by monetary cycles.

On the flip side, household allocations to financials usually tops at the same time the annualized return of the stock market begins to shrink. In other terms, after a great secular bull-market. It is all cycles. Currently standing at an elevated 48% asset allocation to equities.

For paid subscribers, I have touched on the insiders from several angles — Here is another angle. This chart provides a clean overview, and one can be safe to say corporate insiders has stopped chasing the rallies. On a longer time, the corporate insiders are also putting in lower highs — 2022 & 2023. This comes as no surprise to us here at Corporalis Commodis.

Read the insider letter -- What Is The Creme De La Creme Doing (LINK)

Do not get me wrong. I have highlighted in earlier letters that this can continue for quite some time, further concentrating and mis-allocating capital, at the same time further capital-drain key underlying sectors for the economy. Stretched valuations becoming more stretched, and capital drained sectors becoming even more starved.

Let us move on, to the actual base of this letter.

In this analysis and exploration, we will break down the biases and flaws within official inflation statistics to present a more accurate picture of economic growth (or lack thereof) since 2019. With some valuable inputs from my work and E.J. Antoni’s work, you’ll understand just how deep the problem goes, and why the reality might be far grimmer than what mainstream narratives suggest. I will show you, what the ACTUAL GDP growth is since 2019. I will show you exactly how they underreport inflation, and overreport GDP. Providing re-modeled inflation, re-modeled GDP Deflator, re-modeled wage growth, re-modeled GDP. I will also explain to you the hidden strategies the The Bureau of Labor Statistics (BLS) uses to undercount real price increases which affects everything from CPI to GDP growth calculation. Is it a fluke, or up straight corruption?

For paid subscribers only.

Want to access my work, and a broad range of data set? Insights and analysis of what is actually going on in the economy on major time frames. Try a 7 day free trial today, and gain full access to the large archive. No commitment, and you can cancel at any time. My goal is to shine a light on the deceptive layers and underlying conditions that the ordinary man is not aware of, especially in this increasing volatile era we are entering, in both economy and sosioeconomy — and how to capitalize on it, obtaining generational wealth. The path towards 2050.