An open correspondence to the Chair of the Federal Reserve, written from somewhere between the pump and the portfolio.
Dear Jerome,
I want to start by saying I appreciate the effort. I do. March 18 was a difficult press conference to sit in — or, for the rest of us, to watch with one eye on the bond screen — and you carried yourself with the measured dignity of a man who has spent years being wrong in public and has made a kind of peace with it. The grey suit. The careful syntax. The long pauses before answering questions you clearly didn't enjoy.
But I need to talk to you about 53.3.
That's where consumer sentiment ended up on the final University of Michigan print for March. Down from the preliminary 55.5. Down from February's 56.6. The lowest read in three months, and this is with the survey still catching the tail end of happier days — roughly two-thirds of respondents filled it out after Iran. Let that settle. The people who answered while war was already in the headlines dragged the number down that far. Joanne Hsu, who runs the survey, put it plainly: 47% of consumers spontaneously — unprompted, nobody asked them — noted that prices are actively eroding their personal finances right now. Not a fear. An observation. A lived condition. Gas price expectations jumped to their highest since June 2022, when your institution was still pretending the inflation it had spent eighteen months calling transitory was, in fact, transitory.
Jerome, year-ahead inflation expectations are at 3.8%. Up from 3.4% a month ago. The biggest single-month jump since April 2025.
You told the press conference room on March 18 that you'd "reserve" the word stagflation for something more serious. The 1970s. Double-digit unemployment. The misery index at stratospheric altitude. Fair enough — as a definitional matter, fine, we're not there. But I want to push back gently on the rhetorical work that word-reservation is doing for you, because the data underneath it is doing something different.
The OECD has revised U.S. full-year inflation to 4.2%. Your own shop revised PCE forecasts to 2.7% at the March meeting — economists in the Bloomberg survey, less obligated to institutional optimism, put the median at 3.1%. Growth was trimmed. One dissenter on your board, Stephen Miran, wanted to cut even as inflation projections moved up, which is either a masterclass in contrarian conviction or evidence that the FOMC contains multitudes we don't fully understand. Meanwhile, the S&P 500 closed Friday at its worst level since September. The Nasdaq is in correction. The Dow joined it Thursday, sliding 469 points to 45,960. Fifth consecutive weekly loss — a run not seen since the miserable year of 2022, which you'll remember as the year your institution discovered that years of sub-2% inflation had not, in fact, permanently abolished the concept of inflation.
Here is what bothers me most. Not the numbers themselves — markets reprice, sentiment swings, this is the texture of financial life under an active geopolitical shock. What bothers me is the gap between the language available to your institution and the reality it's trying to describe.
You said "tension between the goals." That's technically accurate. But consider what that phrase obscures. Brent crude hasn't been above $110 in years. WTI settled at $94 in late March and continues climbing. Gasoline hit $8.29 a gallon on Alameda Street in Los Angeles — there's a photograph of it, a man in his seventies walking past the sign, which is the kind of image that ends up in documentary films about this period. The Pentagon is reportedly considering sending an additional 10,000 ground troops to the region. The Houthis launched missiles at Israel over the weekend. Trump's April 6 deadline for Iran to negotiate before he threatens their power plants is six days away. The Strait of Hormuz sits there like an open question with a $200-a-barrel alternative scenario attached.
And the phrase we have for this — the official Fed vocabulary — is "tension between the goals."
You did say something interesting, though. You acknowledged that the old "look through" playbook on energy shocks works only when inflation expectations remain well anchored — and you admitted that five consecutive years of above-target inflation have changed the conditions under which that anchor can be trusted. That was honest. That was more than your predecessors typically offered in real time. Core CPI is at 2.5% year-over-year, the lowest since early 2021, wages still rising 3.84% annually — the underlying economy is not yet broken. The U.S. as a net energy exporter has structural insulation the 1970s consumer never had. These are real distinctions.
But the Volcker-era Fed didn't blow up the economy because inflation was theoretically high. It did so because expectations had de-anchored — because people had stopped believing the institution would do what it said, and started pricing permanent inflation into every contract, every wage negotiation, every long-term investment decision. That's the edge you're walking.
The money market funds already have $7.86 trillion. Record. Treasury yields are at nine-month highs. The ten-year is at 4.39%, the two-year at 3.89%. The curve is doing things that suggest the market has moved well past "temporary energy disruption" and into something that looks like a structural repricing of the inflation environment.
The nonfarm payrolls print drops on Good Friday — markets closed, reaction deferred until Monday, which means the quarter ends this week and nobody gets to respond to the most important number of the month until April 6. The same day Trump's Iran deadline expires. The same morning window dressing wraps and real positioning begins. If payrolls miss badly, you'll be entering a holiday weekend with a weakening labor market, elevated inflation, a war with no timeline, and a S&P that hasn't found a floor.
"Tension between the goals" doesn't quite cover it.
I'm not asking you to panic. Panic is Powell's least useful mode — we learned that in 2022 when the belated pivot to tightening came in 75-basis-point lunges that spooked more than they stabilized. I'm asking for language that matches the situation. The public reads between the lines of FOMC statements the way traders read order flow: not for what's there, but for what's being carefully avoided.
When 47% of Americans are unprompted to tell a survey that prices are eating their financial lives, they don't need you to technically distinguish between demand-pull and cost-push or qualify the historical precision of a 50-year-old term.
They need to believe the person in charge knows exactly how bad it is.
Respectfully,
A reader of dots and data
Published March 30, 2026
