Happy Friday eve!

The Fed released its Beige Book survey of regional business contacts on Wednesday.

One thing that stood out to me was how it highlighted consumers pushing back against inflation, and the general increase in price sensitivity.

That said, there’s a glaring difference in what inflation means to the Fed and policymakers, versus everyone else.

Today’s letter is brought to you by iTrust Capital

Bitcoin has been one of the best-performing assets of the last decade. Yet if you turn to a traditional exchange, you have to pay taxes.

iTrust Capital offers tax-advantaged accounts so you can save money on taxes while still investing in crypto. Long-term investors understand the power of an IRA.

Find out how you can leverage one from iTrust Capital.

‘Everything feels more expensive’

I’d be a very wealthy guy if I earned a buck every time I heard someone say that in the grocery store this year.

And yet, if we take government data at face value, inflation has indeed fallen from its 40-year peak of 9.1% two years ago to 3.4% now. 

This data is hard to square for anyone who shops for eggs, coffee, meat, and orange juice — all of which do in fact cost more today than before the pandemic. 

That leaves academics, economists, and politicians sounding tone deaf when they tout “cooling inflation.”

Outside the Ivory Tower, few people take comfort knowing prices are climbing slower than before, but still increasing nonetheless. 

It doesn’t take a columnist to point out that everyday Americans care less about the rate of price changes than they do about how expensive things are now, compared to the past. 

Consider the chart below from Axios.

Consumer prices have climbed 19.3% in total since Joe Biden entered the White House — even though the official inflation rate is a fraction of that.

For food spending specifically, prices are up 20.8%, while inflation for the same category is up an innocuous-sounding 1.1%.

Cumulative price gains combined with the Federal Reserve’s high interest rates have pushed credit card usage and delinquency rates higher over recent months, and sentiment lower.

The New York Fed reported total household debt increased by $184 billion in the first quarter of the year, 1.1% more than the end of 2023.

To that point, a Fed survey released this month found 22% of Americans believe the US economy is in good or excellent shape. 

Before the pandemic, that figure hovered at about 50%.

And even though the latest Consumer Confidence report ticked higher in May, respondents’ expectations for inflation in the next 12 months actually worsened. 

That pessimism has seeped into financial markets, too.

Treasury yields have spiked over the last several days as demand for bonds has slipped and the policy outlook remains shaky.

The only way officials can hope to get on the same page as Americans is to drop the academic jargon when they talk about prices.

But I wouldn’t put my money on it — better save it for groceries.

*At a glance:

Elsewhere:

Rapid-fire:

Last thing:

Interested in advertising in Opening Bell Daily? Email [email protected]