Austan Goolsbee’s worried.

About inflation. Which gives him something, at least, in common with the American everyman.

The latest installment of the NY Fed’s consumer survey showed the forward-looking “better off”-“worse off” spread loitering near its lowest (i.e., most pessimistic) levels since headline inflation sported an eight-handle.

There’s the chart on the “better off”-“worse off” spread. As you can see, it maps very well onto the University of Michigan’s current conditions index, which is sitting near a record low in data going back half a century.

In remarks to CNBC on Wednesday, Goolsbee described this week’s CPI update like he was reviewing “The Witch.” “It’s distressing,” he said. “Borderline disturbing.”

When considered with Chris Waller’s 50bps trial balloon, Lorie Logan’s assertion that the Fed “needs to implement at least two more 25bps” hikes and Jeff Schmid’s reiteration that policy wasn’t restrictive last year and isn’t today (he described current rate settings as “fairly accommodative”), it’s hard to escape the notion that Fed officials are indeed feeling emboldened — freer to speak truth to power — following the midterms.

The figure above gives you some recent historical context for the hawkish repricing at the front-end following Tuesday’s core CPI overshoot, the impact of which was amplified by Fedspeak. The 17bps increase was a two-sigma event.

If Waller didn’t realize the “risk” inherent in explicitly mentioning the possibility of a 50bps move just hours ahead of the CPI update, he’s oblivious. I don’t think he’s oblivious. Although Waller told the audience in London he expected a benign read on underlying inflation for October, it seems clear to me he wanted to set the stage for a front-end repricing in the event the numbers weren’t good.

If the bond market were open Wednesday, it would’ve surely reacted to Goolsbee’s pile-on. Indeed, futures tipped 10s back with a five-handle.

The figure below shows you the impact of the November 10 CPI/Fedspeak combo on hike-pricing for next month’s meeting and also for January.

Traders fully priced December for a hike and then some, which is to say the 27.5bps of priced-in tightening reflects negligible (10%) odds of Waller’s hypothetical 50bps move. The odds of a follow-up hike at the January FOMC jumped from ~25% to more than 60%.

“We’ve long been of the mind that the current policy rate recalibration would be effectively unwinding the 75bps of cuts executed in 2025,” BMO’s Ian Lyngen and Vail Hartman remarked. “Technically, both Waller’s 50bps and Logan’s two quarter-point moves would get us there, but the real question becomes ‘then what?'”

In the same comments to CNBC Wednesday, Goolsbee was unequivocal. “We’ve got a real inflation issue on our hands,” he said. “We’re going to have to deal with that.”