Danielle DiMartino Booth rarely minces words. On X this week, the former Federal Reserve adviser highlighted a specific data point that, if accurate, suggests the US central bank is operating on obsolete intelligence.
The figure that drew her attention is 1.93%.
“And @truflation US Core CPI at 1.93% reflecting real time pressure on rents. Did I mention @federalreserve officials backpedaling?”
Her post underscores a widening fracture in the financial markets: the disconnect between official government inflation readings and faster, alternative measures which suggest the Fed is already behind the curve on rate cuts.
A Real-Time Gauge Breaks the 2% Floor
The sub-2% reading comes from Truflation, a blockchain-based economic data provider. If their 1.93% calculation for US core CPI were replicated in official data, it would mean underlying inflation has already pierced the Federal Reserve’s target.
While the headline number is provocative, the breakdown is more significant. According to Truflation’s methodology, the decline is driven primarily by a collapse in shelter costs. While traditional CPI measures have kept rent prices stubbornly elevated, this real-time gauge indicates that the pressure has largely evaporated.
“Shelter has been the villain of the inflation story for two years. If a credible real-time measure says that villain has walked off the stage, the whole narrative changes.”
The speaker, a macro strategist at a major asset manager in New York, noted that if housing costs have normalized, the justification for restrictive policy weakens considerably.
The Methodology Divide
Truflation does not attempt to mirror the Bureau of Labor Statistics (BLS) index. It is designed to be a faster, more granular alternative. The platform highlights three distinct advantages over the official government print:
- Data Volume: It aggregates over 13 million price observations, dwarfing the roughly 80,000 products tracked in the traditional CPI basket.
- Frequency: Data is ingested and updated daily, rather than compiled for a monthly release.
- Housing Calculation: It rejects the survey-based Owners’ Equivalent Rent (OER) in favor of real-time market mortgage rates.
The approach to shelter is the critical differentiator. The BLS relies on OER—asking homeowners what they estimate their home would rent for—which is often criticized for lagging market realities. Conversely, Truflation applies current 30-year and 15-year fixed mortgage rates to existing and new mortgages to model actual ownership costs.
“It’s closer to how households experience housing expenses. Your cost is your payment, not a hypothetical rent you’d charge yourself.”
Institutional Skepticism Remains
Despite the allure of real-time data, the 1.93% figure faces a significant hurdle: institutional adoption. Truflation remains an outsider in a world dominated by legacy metrics. While the firm touts open-source algorithms, it lacks the decades of backtesting and third-party auditing that Wall Street demands before shifting capital allocations.
Traders generally prize consistency and track records over speed. Without historical data showing how this metric performs during economic pivot points—such as the 2022 inflation peak—major desks remain hesitant to trade on it.
“Institutional desks will not pivot to a new inflation metric on the back of a tweet. They want ten years of backtesting, an audit trail and evidence that it beats the BLS at calling turning points. We’re not there yet.”
This leaves the reading in a strange position: compelling as a signal, but not yet validated as a standard.
The “Backpedaling” Narrative
DiMartino Booth’s assertion that the Fed is “backpedaling” taps into a broader market sentiment that the central bank is quietly softening its hawkish stance. If real-time inflation is indeed below target, the current policy rate is restrictively high, risking unnecessary damage to the labor market.
However, central banks are notoriously slow to adopt new datasets. Policy remains anchored to the official CPI and PCE indices. A rate cut driven by an unvetted blockchain oracle is unlikely, regardless of its potential accuracy. Nevertheless, the narrative that the Fed is fighting yesterday’s war is gaining traction.
The Investment Implications
For portfolio managers, the utility of Truflation lies in its potential as a leading indicator. If the 1.93% reading correctly anticipates a collapse in official shelter data, the argument for owning long-duration assets strengthens immediately. Bonds, high-grade credit, and growth stocks would theoretically benefit from a faster easing cycle.
“Markets are already leaning toward a faster easing path. An index like this, if it proves to be a leading indicator, would justify owning more duration and leaning into rate-sensitive assets.”
Currently, there is little evidence of a mechanical repricing in Treasuries tied specifically to this print. The market treats it as a narrative device—confirmation for the doves—rather than a hard signal for algorithmic trading.
Ultimately, DiMartino Booth has laid down a marker. If upcoming official reports trend toward the 2% zone, this real-time gauge will look prophetic, increasing pressure on the Fed to explain its lag. If inflation proves sticky, the figure will be dismissed as noise. For now, it serves as a stark reminder of the gap between the economy on paper and the economy on the ground.
