Wall Street Wins, Main Street Waits
US Inflation at 2.7% as Energy Falls, Core and Services Stay Hot
July's inflation print landed at 2.7%. The Fed started eyeing rate cuts.
Energy dragged the number down. Gas fell 2.2%. Eggs crashed 4%. Meanwhile, shelter climbed 0.2% monthly, carrying its bloated 33% weight in the index. Your rent didn't get cheaper—it just stopped doubling every two years.
The tariff story's all over the place. Furniture jumped 0.7% after June's 1% spike. Footwear up 1.4%. Yet apparel stayed flat at 0.1%. New vehicles were unchanged. Either businesses are sitting on pre-tariff inventory or they're eating the costs. Goldman says consumers have only felt a quarter of the tariff hit. The rest is coming this fall.
Budget cuts have the Bureau of Labor Statistics running on fumes. They stopped collecting prices in several cities. Just stopped.
By June, over a third of all CPI prices weren't observed but imputed—guessed, modeled with algorithms that assume last month's patterns hold forever. Trump fired Commissioner McEntarfer after she delivered bad jobs numbers. Now he's nominated E.J. Antoni, a Heritage Foundation economist who wrote chunks of Project 2025 and thinks the BLS is deep state.
The Fed's watching this mess and still talking September cuts. Futures pricing in 85–90% probability. Their logic: inflation's down, jobs look weak, time to juice the economy. Never mind that core inflation at 3.1% is still 50% above their target.
Services tell you what's actually happening. Airline fares jumped 4%. Dental surged 2.6%. Auto insurance keeps climbing. Transportation services up 0.8%. This is the sticky stuff that doesn't vanish when oil dips.
Real wages grew 1.2% year over year. Barely.
Businesses front-loaded inventory before tariffs hit. They're selling through that cheaper stock now. Once it's gone, realcosts flow through. It's a simple timing game.
The dentist already figured this out. So did your landlord. Services don't have inventory buffers—they just raise prices.
Markets want to believe it's over. Wall Street gets its rate cuts. Main Street gets told everything's fine.
We're seeing falling energy, flat food, services not yet fully accelerated, and tariffs not yet passed through. Multiple forces temporarily balanced. Watch what happens this fall when inventory runs out, when services inflation accelerates, when the Fed has to choose between pleasing markets or fighting inflation.
One in three prices in your inflation index is now a statistical guess. The guy nominated to run the numbers thinks the numbers are fake. Everyone's pretending 2.7% means something when the methodology's breaking in real time.
Celebrate. The number says we're fine.