We know the American economy is experiencing unprecedented upheaval at this moment. This chaos is the result of President Donald Trump’s haphazard overhaul of US trading policy. 10% universal tariff on all imports. On top of that, elevated tariffs are hitting dozens of countries, even some of our most important trading partners, making the economic environment unrecognizably different.
With inflation continuously increasing, recent reports indicate that the consumer price index (CPI) is up 2.7% from a year ago. Annualized inflation just shot up 0.4% since April. This significant spike in prices has hit every sector, but the impacts can be most powerfully seen in the food and service sectors. Prices for takeout and restaurant meals increased 3.9% over the last year. This increase accounted for fully half of the overall food price increase of 2.9%. By comparison, energy prices have dropped by 1.6% over the same period.
Adding to these inflationary pressures, the job market in general and the transportation workforce in particular have been on shaky ground. The US economy did start strong, at least in the job numbers—the US supposedly added 291,000 jobs in May and June. That very good number was subsequently revised down to a paltry 33,000. This discrepancy by nature introduces caution to the prevailing narrative of a strong jobs market in the face of inflation.
Yet, as I noted here, Trump has been particularly strident in attacking the Fed. He has called for at least a quarter-point reduction in interest rates to support economic growth. He has chosen to personally direct his dissatisfaction at those hoped to be nonpartisan economic officials, including the current Fed Chair, Jerome Powell.
“Jerome ‘Too Late’ Powell must NOW lower the rate,” – Donald Trump
It seems clear that Trump remains committed to having a strong hand in directing economic policy. He has nominated economist EJ Antoni to take over the Bureau of Labor Statistics (BLS). As Antoni has a history of taking the BLS to task for decades, his perspectives may point to a sea change in the way we analyze and disseminate economic data.
Negotiations with China are still continuing. As such, Trump will delay implementation of harsh tariffs on Chinese goods for another 90 days. This decision is intended to give some breathing room for continued and productive discussions while helping to cool some trade-related tempers.
Even in the face of mounting evidence that tariffs and rising inflation are causing recessionary effects, Trump insists on doubling down on their positive influence on the economy.
“It has been proven, that even at this late stage, Tariffs have not caused Inflation, or any other problems for America, other than massive amounts of CASH pouring into our Treasury’s coffers.” – Donald Trump