By John Q. Hosedrinker 
July’s inflation, as measured by the Federal Reserve’s preferred personal consumption expenditures (PCE) price index, edged higher, with core inflation reaching a 2.9% annual rate, the highest since February. The all-items index also hit the consensus outlook at a 2.6% annual rate. While the Fed targets a 2% inflation rate, markets still anticipate the Fed to resume lowering its benchmark interest rate, with experts like Ellen Zentner emphasizing the importance of labor market data. Despite rising prices, consumer spending increased 0.5%, alongside a 0.4% rise in personal income, indicating economic strength.
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Core inflation rose to 2.9% in July, the highest it’s been since February. It feels like every time we turn around, there’s another economic headline, another sign that things are getting tougher. And this one, about core inflation, is particularly noteworthy because it’s supposed to give us a clearer picture of long-term trends, excluding the volatile costs of food and fuel.
It’s no secret that prices are up. Anyone who has been to the grocery store lately knows that. It’s hard not to feel a bit of frustration when you see these numbers climb. I remember when Trump promised he’d bring prices down. The reality seems far more complicated. We’re constantly getting conflicting information and it’s hard to know who or what to believe.
What’s even more concerning is that some believe this is only the beginning. Some see this as the “good ol’ days” compared to what might be coming. There’s talk of economic contraction, of slower growth, and the potential for higher unemployment. Some experts are warning of potential labor shortages in critical sectors. The possibility of volatility in the stock market looms.
The role of tariffs in all of this is a major topic. The fact that the recent GDP figures were touted without much deeper analysis is alarming. There’s a sense that these numbers were artificially inflated by trade policies. The point is that these tariffs increase federal revenue, but it’s a tiny fraction of what the government takes in, and tariffs aren’t even primarily for raising revenue.
Tariffs can also disrupt global supply chains and make domestic industries less efficient. We’re also seeing how Trump’s tariffs are contributing to inflationary pressures, trade wars, higher costs, and instability, which hurts everyone.
All this is also playing out against a backdrop of political maneuvering. There’s a strong sense that economic data is being manipulated. The firing of the BLS commissioner for releasing updated jobs figures is a clear sign of this. It’s undermining trust in the government. The overall approach to trade is chaotic and straining our relationships with allies.
It all boils down to this: Trump’s trade and tariff policies are strategically flawed, costly, and politically motivated. The temporary gains in revenue are outweighed by the economic damage. What’s really happening is that consumers are paying the price.
There is the ongoing argument that 2.9% inflation is perfectly healthy, and less than 1% was terrible. But a stable economy depends on controlling inflation, and the Federal Reserve’s target is 2%. However, if rates are raised, it won’t curb the tariff-fueled inflation.
It’s hard to ignore the reality of this situation. People are seeing their standard of living eroded in real-time. And there’s a sense of déjà vu. Each time a Republican administration takes office, there seems to be a crisis. Then, Democrats are left to clean it up. While Trump and his supporters talked up the economy, data shows underlying weakness.
The point is, the problems we’re facing now have their roots in the past, exacerbated by policy decisions. We’re seeing the long-term consequences of those choices.