KEY DATA: CPI: -0.1%; Excluding Food and Energy: +0.1%; Gasoline: -4.1%/ Real Hourly Earnings: +0.5%/ NAHB: 62 (up 1 point)

IN A NUTSHELL: “Modest inflation is inflating spending power, which is good for households even if it is worrisome for the Fed.”

WHAT IT MEANS: One more day, thankfully. But until tomorrow afternoon, when Janet Yellen and her dysfunctional band of not very merry central bankers let us know what they decided to do or not do, the inflation and economic growth data remain front and center. Inflation is still not too hot, not too cold and not just right. Consumer prices fell in August as gasoline costs plummeted. With prices falling faster so far this month, expect September consumer prices to be down again. The one area where costs are rising at a solid pace is shelter. Rents and home prices are jumping. We are also paying more for our sustenance, both at home and at restaurants. There is growing price pressure on the three major food groups: Cakes, cupcakes and cookies. With the dollar strong and import prices falling, it is not clear why clothing costs are increasing, but they are. Medical care has cooled a touch, at least when it comes to services, though not for medical commodities. The surging vehicle sector is suffering from trade-in overload and used vehicle prices are falling, not surprisingly. And finally, airline fares are crashing like, well let’s skip that analogy.

While the Fed members may be paralyzed by the horror of low inflation, households are probably dancing the jig. An acceleration in wage growth, coupled with declining inflation, led to a surge in real wages in August. With hours worked also increasing, weekly income, adjusted for inflation, rose a solid 2.5% over the year.

On the housing front, conditions remain strong. Homebuilder confidence improved again in September as the National Association of Home Builders’ index hit its highest level in nearly a decade. Sales and traffic are increasing but expectations of future sales were off. Every region posted a gain except the West, which was flat.

MARKETS AND FED POLICY IMPLICATIONS: There are two issues that could keep the Fed from raising rates tomorrow: Low inflation and market volatility. Excluding food and energy, consumer costs are up 1.8% over the year. That is below the Fed’s target but not so much so that it should worry a whole lot of members. The CPI tends to run a touch hotter than the Fed’s preferred measure, the Personal Consumption Expenditure (PCE) price index, but not by very much. So, while inflation is not accelerating, it is not so far from the target that the Fed couldn’t fudge things. As for market volatility, my stance is clear: The Fed has no business protecting investors who don’t believe the Fed is going to do what it has said it wants to do, which is raise rates. Indeed, the uncertain over rate hikes is probably the major cause of the volatility. So, the Fed should raise rates tomorrow, even if the members have not synched their messages with that action very well. Whether they will or not is still anyone’s guess.