It isn’t the data they don’t like — it’s the results — lower inflation and higher real wages.
The “affordability narrative” of the Democrats seems to be in jeopardy overnight.
President Trump teased the American public on Wednesday night, hinting that the Labor Department’s inflation reports to be issued the next morning were going to be good news for America.
What legacy economists and mainstream journalists are actually complaining about is that low-inflation numbers also mean rising wages go further.
Trump said this in his prime-time address to the nation: “Tonight, after 11 months, our border is secure, inflation has stopped, wages are up, prices are down, our nation is strong, America is respected, and our country is back, stronger than ever before.”
Mainstream economists had forecast inflation would rise in November. The estimates for the year-over-year increase in the Consumer Price Index (CPI) among economists polled by Dow Jones ranged from 2.9 percent to 3.2 percent, with the media forecast coming in at 3.1 percent. Core CPI, which excludes food and energy, was forecast in a very tight range of 3.0 percent to 3.1 percent.
The legacy media immediately mounted a campaign against the president’s inflation claims: the year-over-year inflation figure in September had come in at 3 percent and had been rising since May. The Trump administration’s tariff policies were quickly made the culprit for the increase in prices. What was not pointed out was the fact that tariff-affected categories like durable goods were up a mere 1.8 percent through September, while core services were up 3 percent.
If legacy media were not imbued with an immunity to shame, they might have realized that the president receives important economic reports the afternoon before their release. When Trump was alluding to his administration’s accomplishments vis-a-vis inflation, he was already aware of the “good news.”
What the Labor Department Report Actually Says
Fast forward to Thursday morning: Trump’s touting of significant progress on inflation appeared prescient. The Labor Department’s Consumer Price Index rose just 2.7 percent over the 12 months through November. Core CPI (absent food and energy) rose by just 2.6 percent, the slowest pace of inflation since March 2021. In other words, the pace of inflation has declined below where it has been throughout the Biden presidency.
The Democrats’ decision to shut down the government in October and keep it closed through early November meant that much of the data for October’s CPI was not collected. As a result, there was no October report, and the November report does not include the standard month-to-month inflation figure. Instead, we have a two-month figure for inflation, measuring what happened to prices between September and November.
The numbers, for the most part, are good news. The seasonally-adjusted two-month change in overall CPI was an increase of only 0.2 percent. Core CPI was also up by just 0.2 percent.
If we annualize the three-month growth of CPI, prices are up at a 2.1 percent pace. The six-month annualized rate of inflation is just 2.8 percent. For core CPI, the three-month annualized figure is 1.6 percent and the six-month annualized is 2.6 percent. If one measures inflation limited to the Trump presidency only (beginning February) the result is an annualized rate of 2.2 percent. These numbers indicate that there is collectively very little — if any — excess inflation over the Fed’s 2 percent target. President Trump seems to be on solid ground: excess inflation has been curbed.
Grocery prices, one of the most salient for public sentiment about the economy, are up just 1.9 percent compared with a year ago. That’s the lowest rate of grocery price inflation since February.
So, what happened to the vaunted theory of tariff-led inflation?
Core goods, which exclude energy, have seen prices rise just 1.4 percent from a year ago. Apparel prices are up just 0.2 percent. New vehicle prices are up 0.6 percent. Durable goods prices are up 1.5 percent. Appliances are up 0.5 percent, and major appliances are up 1.2 percent.
A note of caution: this is not to say that tariffs aren’t raising any prices. They certainly are raising prices for some items — furniture prices are up 4.6 percent — but these price increases are offset elsewhere. Tariffs — when they aren’t absorbed by foreign producers or U.S. importers — tend to affect categories rather than broad price levels throughout the economy.
It Isn’t the Data Mainstream Economists Don’t Like — It’s the Results
Many economists opposed to Trump’s tariffs are quick to suggest that there may be discrepancies in the data due to the shutdown. They suggest that the government had to impute (make assumptions) about what may have happened in October and even November. Also, some prices were collected later in the month, which might have the effect of distorting the index because merchants may have discounted more heavily as we moved toward the holidays. Rents and other retail prices are often lower toward the end of the month when landlords and merchants try to clear inventory.
While all of that is true, there’s good reason to suspect that if the inflation report had come in worse than expected, much of the “skepticism” about flawed data would not have received mention. Consider the fact that analysts who were making forecasts were quite aware of all the data issues they now introduce as problematic. Their forecasts used the same information that the Trump administration used (including the shutdown issues), and yet, they complain because this report still came in better than expected — better than they had hoped.
And if we zero in on indexes likely to be less distorted by shutdown data issues, the picture is the same. Core goods less food, energy, and used cars were up just 1.1 percent year-over-year.
What legacy economists and mainstream journalists are actually complaining about is that low-inflation numbers also mean rising wages go further, and this plays well with what Trump has said his tariff policies would do for the average working American. Things are more affordable.
In the 12-months through November, the median weekly earnings of Americans employed in the private sector rose 3.5 percent, which means they outpaced inflation by 0.8 percent. Those real wage gains are likely to go a long way in assuaging affordability concerns, no matter how frequently the media raise the false alarm over tariffs, or left-wing economists tell the public to believe the “noise,” and just ignore the data.
READ MORE from F. Andrew Wolf Jr.:
It Is Not Time to PAUSE Immigration, Again
The Netflix-Warner Bros. Merger — Is ‘Going to the Movies’ Over?
