10 Charts: Markets On Edge. Data Says Stable.

BIG PICTURE

💡 Markets remain on edge for consumer and inflation, yet both still suggest things remain stable.

I have seen a lot of charts and commentary on inflation and growth this week, and the story still depends heavily on which data set you are looking at. Of all things this week, just look at chart 3.

Official inflation data suggests inflation is running around 3.8% Y/Y, while consumer sentiment data says consumers are about as negative as ever. But, and this may sound familiar to anyone who has read our Avory newsletter since 2022, we continue to believe the real-time read on inflation matters more. Today, that figure is closer to 1.95%, creating roughly a 185 basis-point gap versus the official print. It is not rocket science to figure out that this has been a better predictor, as the economy has been stable enough over the last 3 years despite the seesaw of the rhetoric.

Now, the market seems to be treating the cyclical AI buildout as one of the few places to hide. AI is clearly a structural theme, but the current spending cycle is very much happening now. It has been relatively insulated from whatever macro narrative the market wants to run with on any given day. More importantly, the underlying spend keeps showing up in the data, including Ramp activity, CapEx plans, and the share-take patterns we are tracking.

Underneath all of this, the key question is simple: is wage growth running ahead of the inflation rate consumers are actually experiencing?

Using real-time inflation, real wages are running around +1.8%. Yes positive despite the charts flying around this week. Using the official CPI basis, they are roughly -0.1%. Those are two very different realities.

The other point worth highlighting is the disconnect between consumer sentiment and actual consumer behavior. Sentiment keeps printing near all-time lows, while spending continues to print near all-time highs. Credit card data though shows consumer spending up +3.2% Y/Y, with strength still showing up in travel, restaurants, and leisure.

We already knew energy was going to perk up in CPI, but shelter continues to do some of the heavy lifting in the official inflation print, but market rents tell a different story. Apartment List data shows rents running -1.7% Y/Y. The issue is the well-known 12 to 18 month lag in how shelter flows through CPI, something we have been discussing for years. Net net, real wages are positive, so consumer will spend, and they are spending, and check my article this past week for more color on it.

[ 1 ] Real-time inflation is already below 2%.

So lets start here. Truflation's real-time read is sitting at 1.95% with CPI Y/Y at 3.8%. The real-time price data pulls across millions of items, CPI is largely survey-driven with lagged shelter. Obviously this suggests inflation in the real economy has already done what the Fed has been waiting on for two years. That's our read atleast. If it was not for the energy spike, I actually think we would be talking deflation right now, which is much more concerning.

[ 2 ] Shelter is the largest CPI component and it lags by 12 to 18 months.

Apartment List has rents running -1.7% Y/Y, well off the +17.8% peak from Jan '22. The problem is BLS still counts shelter heavy in the basket, and the methodology lags real-time rents by 12 to 18 months.

Something we've been talking about for years now. If you strip out the lag and use what's actually happening in housing today, the official inflation print drops meaningfully closer to the real-time number.

[ 3 ] Real wages depend on which inflation print you trust.

This is the most important chart here. Maybe.

Nominal average hourly earnings +3.7% Y/Y. Minus CPI you get -0.1%, which is what the government data shows the consumer is feeling. Using real-time you get +1.8%, which is what we think they're actually experiencing.

That's the entire macro debate in one chart. We've been in the camp that real-time data tells the truer story, and the consumer behavior on the next few charts backs that up.

[ 4 ] Consumer spend +3.2% Y/Y, sitting near the highs.

Credit card data has consumer spend running +3.2% Y/Y as of May '26, near the top of the post-pandemic range.

Sentiment surveys say the consumer is miserable. Their actual spending says otherwise.

Either the macro view has been wrong, or something else, but clearly the data we're tracking shows a consumer that can stand whatever is taking place. Their spending figures keep supporting that view.

[ 5 ] The spend is showing up in travel, leisure, and restaurants.

Bank of America internal data has travel & tourism contributing +1.6pp to Y/Y services growth in April, the highest of the cycle. Restaurants and leisure are flowing positive alongside it. If the consumer were actually cracking you'd see discretionary go first. Instead, discretionary is leading. Same story, different week. Strange right?

[ 6 ] First Watch keeps outrunning the restaurant peer set.

Now something in the portfolio. A company executing well as shown above. But hard to run away from consumer spending fears in the short term.

Here's the facts though.

First Watch posted +2.8% same-store sales in 1Q26 against a peer average of +0.6%. The brand keeps taking share quarter after quarter, and the recent trajectory tracks the broader breakfast and brunch tailwind. Small sample, but worth watching. This is the kind of name where the consumer thesis we just walked through actually shows up in earnings but not in price.

[ 7 ] Zillow has outrun the housing industry for 10 straight quarters.

Same story to above. Rates push higher on inflation fears, which sends housing related assets lower.

Yet, Zillow revenue growth has outpaced the broader housing industry by an average of +14.3% over the last 10 quarters.

Industry volume was negative through most of '23, Zillow was positive every quarter. Q2'25 had Zillow at +15% versus industry at +1.5%. This is what share-takers look like in a soft category.

Reinforces our thesis on owning the dominant platform when the macro setup is choppy.

[ 8 ] Anthropic just overtook OpenAI in business adoption.

This one is crazy and not something you probably thought a year ago. Using Ramp's AI Index, which tracks paid AI subscriptions across 50,000+ US businesses, it shows Anthropic at 34.4% adoption versus OpenAI at 32.3% as of April. That's the first crossover.

Overall AI adoption is now at 50.6% of tracked businesses, up from basically nothing two years ago. The cyclical buildout we've been talking about is real, and it's happening at the business level, not just the consumer app level.

[ 9 ] AI app uninstalls are running at a record pace.

Now this supports the crossover from above. Web traffic data has consumer AI apps churning hard on the install/uninstall front.

Gemini +169% Y/Y uninstall rate.

Copilot +138%.

ChatGPT +132%.

Claude +90%.

The business adoption from the previous chart is the durable part of AI. The consumer app layer is far more volatile and people are trying everything. Two very different stories under the same umbrella.

[ 10 ] Stripe Atlas startup formation just hit a record.

Now another cool data point showing what is taking place. Stripe Atlas hit 6,250 incorporations in Q1'26, a new high and roughly 2.3x the post-pandemic 2024 trough. Whatever else is going on in the macro, more people are starting companies right now than at any point in the platform's history. That's a tell on real economy formation that doesn't show up in any sentiment survey. That's the data.

Net Net.

We continue to focus on the main data here that matters. We have a piece out next week showing where we think we are in the AI buildout, when we think it peaks, and how to think about it. It will only show on Substack day 1, so make sure you are subscribed.

Investing with Data: https://investingwithdata.substack.com/

That's all for this week.

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