....and since most of these households own their own homes, and either have no mortgage or have refinanced into a 30-year fixed-rate mortgage at an extremely low rate, it means that the largest expense for these households is not rising even as the Fed is hiking, but their wages are (median wage growth in the US is ~6.5%, per the Atlanta Fed). For many of these households - which represent a large share of national income- Sheets said  that  financial conditions aren't tightening, they're easing, which may also help to explain why core inflation is so 'sticky' on the way down.

Naturally, this is good news for America's wealthy and upper-middle class, but it's not good news for everyone else, and as Sheets admits, things look different at the low end of the income distribution, where households are more likely to face high rent inflation and be more impacted by higher food and energy costs. "This seems to present a real dilemma, one that in the market's eyes increases the likelihood that the Fed will have to do more."

Perhaps, but in a note published by Morgan Stanley's Michael Wilson last week, the chief US strategist writes that he recently held his monthly meeting with lead analysts across US research and the bank's economists/strategists, to better connect macro and micro data points. Understandably, the session focused around inventory and especially the health of the consumer.