When Lower Inflation Hurts
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 569 Ratings
🗓️ 20 February 2026
⏱️ 25 minutes
🧾️ Download transcript
Summary
Today's Post - https://bahnsen.co/4tNvJGE
David Bahnsen opens Dividend Cafe after a volatile week marked by a weaker-than-expected GDP report and a Supreme Court ruling striking down President Trump’s tariff rationale under the Economic Emergency Act (with a deeper tariff discussion coming Monday). His core thesis: disinflation is likely in 2026—and it may not feel positive.
He clarifies the difference between inflation (rising prices), disinflation (slower price increases), and deflation (falling prices). Bond markets are signaling softer expectations, with the 10-year Treasury near 4.07% and five-year inflation breakevens around 2.4%, suggesting modest real growth ahead.
Recent GDP registered about 1.4% annualized, distorted in part by a government shutdown, while core PCE inflation is roughly 3% year-over-year versus 2.9% a year ago. Bahnsen expects services-driven disinflation, particularly as rent measures catch up to real-time data. However, that may not improve affordability given tight housing inventory and a frozen resale market.
He also warns that business investment is overly concentrated in AI and data centers—echoing the fracking-era CapEx surge—while broader investment remains subdued. Risks to growth include a weak labor market with low hiring, a personal saving rate near 3.4% (raising the chance tax refunds rebuild savings instead of fuel spending), and muted bank lending despite lower rates.
00:00 A wild news week
01:48 Cutting through economic spin
03:23 Why 2026 disinflation may disappoint
04:36 Bond market signals
07:16 GDP and data distortions
10:49 Services-led disinflation
14:05 Concentrated CapEx risk
16:38 Labor, savings, and lending
20:09 Tariffs and demand drag
22:24 What to watch next
Links mentioned in this episode: DividendCafe.com
Transcript
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| 0:00.0 | Welcome to the Dividend Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. |
| 0:11.8 | Hello and welcome to the Dividend Cafe. I am your host, David Bonson, and I can tell you that in what is getting closer and closer to 20 years of doing this weekly Friday commentary, I don't think we've had three Fridays where so much happened from the time I had already begun writing it on Thursday to the time that I was in the midst of writing it Friday morning |
| 0:39.9 | and even throughout the period of the actual writing Friday morning. |
| 0:45.7 | Just in terms of newsworthy events, and ironically, some of them this week being relevant |
| 0:51.7 | to the subject of today's Dividing Cafe, I was writing already about |
| 0:57.0 | disinflationary expectations and the paradoxical fact that I see disinflation coming in a negative way, |
| 1:07.2 | in a not constructive way, in a politically disadvantageous way this year. And there's a sort of |
| 1:13.8 | economic and investor thing around that. And then as I was in the midst of writing Friday morning, |
| 1:20.7 | the GDP report came out and was substantially below expectations for a variety of reasons. |
| 1:29.5 | And then in the midst of me writing, the Supreme Court ruling, long awaited, came out that did indeed strike down President Trump's rationale for tariffs that is being used for a significant portion, this so-called |
| 1:46.7 | economic emergency act. So I am going to be really focusing on the Supreme Court action |
| 1:55.5 | and the expectation for tariffs because of it in the Monday Dividing Cafe. But today, I really want to talk about the |
| 2:03.1 | state of the U.S. economy. I want to talk about price expectations. I want to talk about a GDP |
| 2:08.4 | number. And I desperately want to make the case for us separating headline data, month by month |
| 2:16.0 | data, political spin, the way in which numbers fit into |
| 2:20.1 | narratives for either side of the aisle. I don't care right now about that at all. It's irrelevant |
| 2:24.7 | what side we're talking about. I want to talk about how for my job and the way I communicate |
| 2:32.2 | to you, the way in which this flows to a particularly politically |
| 2:38.1 | advantageous set here and there is not correlated to the way in which I present the data |
| 2:47.3 | and the way I have to unpack nuances and caveats in the data that are necessary |
| 2:54.4 | to understand economically. So there is a sense in which today's thesis, which I'm going to |
| 3:03.1 | just read you a simple sentence and then spend some time here unpacking, this sentence is perhaps |
... |
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