“Starting on day one of my new administration, we will end inflation and we will make America affordable again because the prices are too high.” Donald Trump at a campaign rally in Juneau, Wisconsin, Oct. 6, 2024.
"BIDEN INFLATION UP!" — President Trump’s post on Truth Social, Feb. 12, 2025, reacting to a report showing inflation jumped in January.
Donald Trump is certainly not the first president to learn the difficulty of taking ownership of something he mercilessly blamed his predecessor for during campaign rallies.
Nor is he the first to come face-to-face with the reality that presidents can do little to immediately affect the economy, at least not in a good way.
"BIDEN INFLATION UP!" — President Trump’s post on Truth Social, Feb. 12, 2025, reacting to a report showing inflation jumped in January.
Donald Trump is certainly not the first president to learn the difficulty of taking ownership of something he mercilessly blamed his predecessor for during campaign rallies.
Nor is he the first to come face-to-face with the reality that presidents can do little to immediately affect the economy, at least not in a good way.
It would be silly to blame Trump for this week’s Labor Department report that found inflation, in January, jumped back to a 3.3% annual rate, the steepest climb in a year and a half. After all, he didn’t take the oath of office until the 20th of that month.
But it was equally silly for him to promise to bring down prices on his first day in office.
Economies are complicated. Inflation is hard to tame.
And people, who confront prices daily while shopping, are quick to cast blame.
There is plenty of that to go around.
Trump’s assertion that former President Joe Biden was responsible for inflation has some truth to it. But first-term Trump had a hand in it, as well.
As I wrote last September, researchers at the MIT Sloan School of Management studied inflation in 2022 and found that neither greed (a favorite scapegoat of the Democrats) nor supply chains were the main cause.
“Our research shows mathematically that the overwhelming driver of that burst of inflation in 2022 was federal spending,” Mark Kritzman, a senior lecturer at MIT Sloan, said on the school’s website.
They found that federal spending accounted for 42% of inflation, while the self-fulfilling expectations of consumer pessimism made up 17%, the next highest category.
Inflation has many fathers. Even the best economic plans can turn to dust quickly if something like the bird flu sends the price of eggs soaring. But Washington didn’t help matters by pumping money into the economy through COVID-19 stimulus checks.
And those started in the first Trump administration, later to be turbocharged by the Biden administration.
Arguing about the past is not productive unless it informs the future. Right now, the road to the future is filled with inflation concerns.
Chief among these are tariffs. Economists are careful in how they approach the subject because no one is sure whether recently imposed tariffs represent a long-term economic strategy or a short-term leverage to exact concessions, as seemed the case recently with Mexico and Canada. Trump paused proposed tariffs on those countries, but then imposed another 10% on China, followed by 25% on all steel and aluminum imports.
Many economists are warning of higher prices ahead. Stan Veuger, senior fellow at the American Enterprise Institute, said even the threat of tariffs can raise prices. It causes importers to charge more in order to stay ahead of them. Even regular folks begin to buy more now, while prices remain low, which creates a demand that pushes prices upward.
Paul Ashworth, chief North America economist at Capital Economics, warned that tariffs will keep the Federal Reserve from lowering interest rates.
And still others worry that tax cuts, such as exempting tips from income taxes, could flood the economy with more cash, leading to another round of high prices. The crackdown on undocumented immigration could increase the cost of seasonal labor and lead to higher prices for food.
Politics often requires prioritizing needs and costs. Some people may find a higher grocery bill to be worth the roundup of migrants, or tax cuts to be worth the cost of higher deficits and interest payments on the national debt.
But voters seldom delve into that kind of nuance.
This week’s inflation report may have reflected a one-time decision by business owners to raise prices at the start of the year, perhaps in anticipation of tariffs. Maybe bird flu will disappear and egg prices will return to earth. Maybe Sen. Mitch McConnell was wrong when he wrote in the Louisville Courier Journal that tariffs would cost residents of his home state of Kentucky an extra $1,200 a year, on average.
But the lesson of the last election was that people don’t like inflation. Politicians, therefore, would be wise to avoid getting blamed for it.
But it was equally silly for him to promise to bring down prices on his first day in office.
Economies are complicated. Inflation is hard to tame.
And people, who confront prices daily while shopping, are quick to cast blame.
There is plenty of that to go around.
Trump’s assertion that former President Joe Biden was responsible for inflation has some truth to it. But first-term Trump had a hand in it, as well.
As I wrote last September, researchers at the MIT Sloan School of Management studied inflation in 2022 and found that neither greed (a favorite scapegoat of the Democrats) nor supply chains were the main cause.
“Our research shows mathematically that the overwhelming driver of that burst of inflation in 2022 was federal spending,” Mark Kritzman, a senior lecturer at MIT Sloan, said on the school’s website.
They found that federal spending accounted for 42% of inflation, while the self-fulfilling expectations of consumer pessimism made up 17%, the next highest category.
Inflation has many fathers. Even the best economic plans can turn to dust quickly if something like the bird flu sends the price of eggs soaring. But Washington didn’t help matters by pumping money into the economy through COVID-19 stimulus checks.
And those started in the first Trump administration, later to be turbocharged by the Biden administration.
Arguing about the past is not productive unless it informs the future. Right now, the road to the future is filled with inflation concerns.
Chief among these are tariffs. Economists are careful in how they approach the subject because no one is sure whether recently imposed tariffs represent a long-term economic strategy or a short-term leverage to exact concessions, as seemed the case recently with Mexico and Canada. Trump paused proposed tariffs on those countries, but then imposed another 10% on China, followed by 25% on all steel and aluminum imports.
Many economists are warning of higher prices ahead. Stan Veuger, senior fellow at the American Enterprise Institute, said even the threat of tariffs can raise prices. It causes importers to charge more in order to stay ahead of them. Even regular folks begin to buy more now, while prices remain low, which creates a demand that pushes prices upward.
Paul Ashworth, chief North America economist at Capital Economics, warned that tariffs will keep the Federal Reserve from lowering interest rates.
And still others worry that tax cuts, such as exempting tips from income taxes, could flood the economy with more cash, leading to another round of high prices. The crackdown on undocumented immigration could increase the cost of seasonal labor and lead to higher prices for food.
Politics often requires prioritizing needs and costs. Some people may find a higher grocery bill to be worth the roundup of migrants, or tax cuts to be worth the cost of higher deficits and interest payments on the national debt.
But voters seldom delve into that kind of nuance.
This week’s inflation report may have reflected a one-time decision by business owners to raise prices at the start of the year, perhaps in anticipation of tariffs. Maybe bird flu will disappear and egg prices will return to earth. Maybe Sen. Mitch McConnell was wrong when he wrote in the Louisville Courier Journal that tariffs would cost residents of his home state of Kentucky an extra $1,200 a year, on average.
But the lesson of the last election was that people don’t like inflation. Politicians, therefore, would be wise to avoid getting blamed for it.
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