TRUMP’S ECONOMIC CAMPAIGN. President Donald Trump gave a nationally televised speech Wednesday night, predicting the economy would improve dramatically under his policies. Democrats and their allies in the media scoffed. Meanwhile, economists predicted the Bureau of Labor Statistics’ upcoming measure of inflation, due just hours after the president’s speech, would show inflation rising to 3.1% year after year in November, with core inflation at 3.0%.
Fast forward to Thursday morning. The BLS released new numbers, which were significantly better than predicted: inflation at 2.7% year over year, with core inflation at 2.6%. All the news accounts noted that inflation fell “unexpectedly.” Another way of saying that is that the economists who predicted a different result were wrong.
“Before the numbers come out, we look at the forecast from everybody we can find on Bloomberg,” White House economic adviser Kevin Hassett told Fox Business Thursday morning. “We looked at 61 forecasts, and this number came in better than every single one of them…This is just an astonishingly good CPI [consumer price index] report.”
The good news, while encouraging for working Americans, was a bump in the road for Trump’s critics, who had already been trashing the speech for nearly 12 hours before the inflation stats were released. There’s no reason to expect they will change their tone. But the fact is, the CPI report is quite hopeful news for the White House and the nation. Trump has two main economic goals: 1) getting inflation down to the low level, 2% year-to-year, that the Federal Reserve believes is best for maintaining maximum employment and price stability; and 2) getting wages to rise significantly faster than inflation. If those things happen, working Americans will do better, and their standard of living will improve. Trump has already made progress on wages, and everyone should hope that the November report is a sign that inflation will fall to the 2% mark.
It’s certainly clear Americans need something to ease their economic anxieties. A new Fox News poll released a couple of hours before the speech found deeply negative feelings about the economy. “An overwhelming majority expresses concern about high prices,” Fox pollster Dana Blanton wrote. “Four times as many say they’re losing financial ground as feel they’re getting ahead, and most think the economy is in bad shape.”
Reading the poll, one gets the impression that some Americans are more worried about the economy than is warranted. For example, when the pollsters asked, “How concerned are you about inflation and high prices?” the result, about 90% saying they are extremely or very concerned, is roughly the same as the answers to the question from April through October of 2022, when year-over-year inflation hit 7%, then 8%, and then 9.1%.
Things were worse then. So why is concern still so intense? First, because prices are still high. The worst inflation of the Biden years raised prices to a burdensome level for millions of Americans. When the rate of inflation went down, that did not mean prices went down; it just meant that the rate of increase went down. So people are still living with the terrible consequences of Biden’s inflation.
In addition, now that inflation is an issue Democrats and their supporters in the media can use against Trump, under the heading of “affordability,” it’s possible voters, in addition to their own economic experiences, are also hearing and reading more negative commentary about the economy. So it’s possible they’re down on it for their own reasons, and also because of what influential commentators say.
Trump’s speech was part of the beginning of what the White House says will be an extended campaign to ease those economic worries. The president has already held one rally in Pennsylvania and is scheduled to hold another in North Carolina on Friday evening. But a campaign will only take Trump so far. If his efforts to strengthen the economy work, he’ll be in great shape. If they don’t, campaigning won’t help.