CHICAGO BUSINESS ACTIVITY CRASHES TO 47.1 — ONLY 8% OF AMERICANS EXPECT THEIR PAY TO BEAT INFLATION — THE FED’S TWO JOBS ARE NOW FIGHTING EACH OTHER
The people with no hedge against rising prices are watching their buying power shrink the fastest. Nothing in this month’s data says it stops soon.
KEY RECEIPTS
Chicago Business Barometer: 47.1 in August, down from 57.6 in July — a 10.5-point drop and the first contraction in four months. Forecast called for 57.9.
UMich consumer sentiment: 51.7, down from 55.2 in July, about 11% below a year ago.
Year-ahead inflation expectations: 4.0%. Long-run (5-10yr) expectations: 3.3% for the third straight month — above the 2.8%-3.2% range that held through all of 2024.
Only 8% of consumers expect their income to grow faster than prices this year, down from 18% in December 2024.
Joanne Hsu, UMich survey director: declines “particularly acute” among older consumers, lower- and middle-income households, and those without stock holdings.
Sources: MNI Markets / ISM Chicago; University of Michigan Surveys of Consumers.
UMich consumer sentiment: 51.7, down from 55.2 in July, about 11% below a year ago.
Year-ahead inflation expectations: 4.0%. Long-run (5-10yr) expectations: 3.3% for the third straight month — above the 2.8%-3.2% range that held through all of 2024.
Only 8% of consumers expect their income to grow faster than prices this year, down from 18% in December 2024.
Joanne Hsu, UMich survey director: declines “particularly acute” among older consumers, lower- and middle-income households, and those without stock holdings.
Sources: MNI Markets / ISM Chicago; University of Michigan Surveys of Consumers.
Two numbers landed the same morning, and neither one is good news by itself. The Chicago Business Barometer, a gauge of how much business activity is happening in the region, fell from 57.6 to 47.1 in a single month. Anything under 50 means the region’s economy is shrinking. That’s the sharpest one-month drop this index has shown all year, and it snapped three straight months of growth. The same morning, the University of Michigan’s survey of shoppers came in at 51.7, down from 55.2 in July, with people expecting prices to keep climbing 4% over the next year. Business activity shrinking while prices keep rising is called stagflation. It doesn’t have an easy fix.
The number that matters most is 8%. That’s the share of people surveyed who think their paycheck will grow faster than prices this year. In December 2024, that number was 18%. Cut by more than half in under two years. UMich’s Joanne Hsu says the pain lands hardest on older people, lower- and middle-income households, and anyone without stocks or other assets that rise with inflation. In plain terms: the people with no hedge against rising prices are watching their buying power shrink the fastest, and nothing in this month’s data says it stops soon.
The Federal Reserve has two jobs: keep prices stable and keep people employed. Right now those two jobs are pulling in opposite directions. Cut interest rates to help a slowing economy, and prices could run hotter. Raise rates to slow prices down, and the slowdown gets worse. Long-run inflation expectations have held at 3.3% for three straight months, above where they sat all through 2024. That means people no longer expect the Fed to hit its own 2% target. Once that expectation breaks, the Fed loses its best tool: the public’s belief that it can do what it says it will do.
This is the exact spot the hardest money makes its case. Not as a trade on one bad month of data, but as insurance against a system that keeps finding the same exit. Every time a government has hit a wall like this one, the easy political path has been to water down the currency instead of facing the pain directly. A fixed supply of 21 million coins can’t take that exit. That’s the whole argument in one sentence, and this week’s numbers just made it a little harder to ignore.
A promise you keep rewriting isn’t a promise.
The cap is still twenty-one million.
The cap is still twenty-one million.
TFTC Newsdesk · MNI Markets / ISM Chicago + University of Michigan Surveys of Consumers (primary data) · Fri Aug 28 2026 · 1:06 PM ET