Not long ago, they promised inflation was under control. The Fed insisted it was cooling. The experts assured everyone that things were headed in the right direction. Now, the numbers tell a different story. Prediction markets have turned sharply, and suddenly, inflation hitting 4% this year isn’t just a possibility—it’s the base case. Worse, there’s now a 22% chance it blows past 5%.
Consumer expectations have already shifted. People aren’t buying the “inflation is easing” narrative anymore. Since the trade war began, one-year inflation expectations have jumped to 4.3%. When the public starts pricing in higher costs, it becomes a self-fulfilling prophecy. Spending behavior changes, wages get pushed up, and the cycle keeps feeding itself.
Meanwhile, the Congressional Budget Office is clinging to fantasy. Their models still project 10-year Treasury rates staying at a high of just 4.2%, never rising beyond that. Because of course, in Washington’s version of reality, inflation is a temporary nuisance that will conveniently disappear. But out here, in the real world, nothing about this economy suggests prices are about to stop climbing.
Housing remains the biggest punch to the gut. The median monthly mortgage payment has skyrocketed to $2,220—a staggering 89% increase in just five years. Wages haven’t even come close to keeping up. To afford the median-priced home in America, a household now needs to earn at least $115,454 a year. That’s the new standard. And for first-time buyers? The situation is even worse.
Only 17% of renters can afford a median-priced starter home. Just four years ago, that number was 42%. In raw numbers, 8.7 million renter households have been priced out of homeownership since 2021. The American Dream is slipping further out of reach, and there’s no serious plan to fix it.
J.P. Morgan expects mortgage rates to settle around 6.7% by the end of 2025, which means affordability problems aren’t going anywhere. Home prices might slow, but they’re not crashing. The wealth effect from existing homeowners will keep them rising—just at a weaker pace. For those who don’t already own, the gap is only getting wider.
And in the background of all this, another number tells an even darker story. The suicide rate in America has climbed to levels not seen since the Great Depression. People are suffocating under financial pressure, locked out of opportunities they once had, and watching the cost of everything spiral beyond their reach.
Sources:
https://x.com/dgsommersmkts/status/1895142353242861743
https://x.com/ReefInsights/status/1894745735209308526
https://x.com/infraa_/status/1895164235883389315