Dinner’s Still Expensive – Inflation Bites, Powell Blinks

For the week ended 8/23/25.

So here we are again. Jerome Powell strolled into Jackson Hole and, for the first time in a while, cracked open the door to a rate cut next month. His reasoning? The labor market might finally be cooling enough to help tame inflation, never mind that tariffs keep nudging prices higher.

Let’s rewind. For most of 2025, the Fed’s hawkish tone has kept rates glued in place, while also earning Powell a steady stream of Trump’s wrath. (My personal favorite: Trump touring the Fed’s HQ construction project – “It looks like it’s about $3.1 billion. It went up a little bit, or a lot.” Powell: “I’m not aware of that, Mr. President.” Awkward.) Meanwhile, the CPI has seesawed between 2.3% and 3.0%, currently parked at 2.7%. Wholesale prices (PPI) just spiked 0.9% in a single month – on top of a 3.3% annual increase. And let’s not forget the Fed’s stated goal: 2.0% inflation. Fun fact: we haven’t seen that number since February 2021.

Still, Powell now says “the balance of risks appears to be shifting.” Translation: a cut could be coming. Whether that keeps Trump off his back is another matter entirely. Case in point: the DOJ revealed last week that Fed Governor Lisa Cook may be under investigation for mortgage fraud. Trump instantly took to social media calling for her ouster. Subtlety has never been his strong suit.

The bigger issue: living with inflation that persistently overshoots Fed targets is a recipe for long-term pain. (Been to a family dinner out lately? That check burns hotter than jalapeños.)

Markets, ever fickle, shrugged it off. U.S. stocks climbed 1.5% on Friday, trimming earlier losses and eking out a 0.3% gain for the week. Commodities rose 1.3% and global real estate 1.9%, while foreign equities keep making the U.S. look like the JV squad, up 23.4% year-to-date versus America’s 10.9%.

Looking ahead: Consumer Confidence (Tuesday), Q2 GDP second estimate (Thursday), and for Boulder locals, CU kicks off Friday night. Stay frosty, stay productive, and good morning. 

Interesting data point of the week.

Source: Visual Capitalist

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