CPI for all items rises 0.4% in August, 2.9% YoY; shelter and food up

Fed cuts, odds, and policy tradeoffs

• Commenters note markets pricing ~100% odds of a September cut (with debate over 25 vs 50 bps) and essentially 0% for “no change.”
• Some find this inconsistent with Powell’s stated focus on fighting inflation; others think rising unemployment now dominates inflation in the Fed’s mandate.
• One thread explains how tools like CME FedWatch infer probabilities from swap curves, forcing discrete “0/25/50” bins that hide non-zero chances of no move or larger moves.
• Prediction markets also heavily favor a cut; some users want to bet on “no change” as a contrarian view.

Inflation level, trend, and measurement quirks

• Several users stress that 0.4% MoM (seasonally adjusted) annualizes to ~4.9%, higher than the 2.9% YoY headline; others push back that monthly data is noisy and extrapolation is misleading.
• There’s agreement that the long-run target is 2% (on PCE, not CPI) and that 2.9% is above target but not cause for panic, especially given recent history.
• Some worry cuts now could lock in a higher, persistent inflation regime or force harsher action later.

Shelter and rents as main CPI driver

• Multiple comments highlight that “shelter” is the dominant contributor to the August CPI increase, with ~3.6% YoY vs 2.9% overall.
• Explanations offered: constrained housing supply in big coastal markets; high financing costs; expensive imported materials; tight construction labor; RTO mandates and AI-driven hiring in a few metros.
• Confusion arises because national home prices are only slightly up; others explain CPI uses actual rents and owners’ equivalent rent, not sale prices, and that these adjust with a lag.
• Some speculate about landlord coordination and algorithmic pricing (citing the RealPage antitrust suit).

Tariffs, immigration, and housing costs

• Users discuss tariffs as a “one-time” price bump vs a drawn-out process that can mimic persistent inflation.
• Debate over whether deportations should lower rents; several argue the scale is too small and that immigrants are more important as construction and service labor, so crackdowns may raise housing costs.

Broader macro worries and equity vs labor

• Comments frame inflation as benefiting capital over labor, with AI investment and stock buybacks contrasted against a weakening job market.
• Others warn the Fed is in a “double bind” reminiscent of the 1970s: rising inflation, softening employment, deglobalization, and political pressure, with risk of dollar debasement and a harsher adjustment later.