January’s Consumer Price Index (CPI) data revealed a 0.5% increase in consumer prices from December, marking the fastest pace since September 2023 and an annual inflation rate of 3%. This unexpectedly high figure, exceeding economist predictions, reflects broad price increases across various goods and services, including a significant 15.2% jump in egg prices. Even the core CPI, excluding volatile food and energy, rose 0.4% monthly, reaching an annual rate of 3.3%. This surge in inflation counters the Federal Reserve’s goals and could lead to continued high interest rates, contrasting with President Trump’s desired policy adjustments.
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December’s Job Openings and Labor Turnover Survey revealed a decrease in job openings to 7.6 million, a decline of 556,000, despite steady hiring and quit rates. This drop, concentrated in professional and business services, education, and finance, lowered the job openings-to-worker ratio to 1.1:1. While layoffs remained relatively low, the overall data suggests a cooling labor market, impacting upcoming Federal Reserve policy decisions.
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Trump’s recent downplaying of inflation as his top priority raises significant questions about the future trajectory of consumer prices. If his past actions and pronouncements are any indication, a renewed focus on other policy areas, potentially at the expense of addressing inflationary pressures, could lead to considerable economic uncertainty for consumers.
The potential impact on consumer prices is multifaceted and hinges on several key factors, including his approach to trade and economic policy. His history suggests a preference for protectionist measures, such as tariffs, which would likely increase the cost of imported goods, immediately impacting everyday consumer items. This could lead to a ripple effect, causing domestic businesses to adjust their pricing strategies and further escalate the cost of living.… Continue reading
President Trump publicly urged immediate interest rate reductions globally, marking a renewed confrontation with the Federal Reserve. His comments, delivered at the World Economic Forum, followed his past criticisms of Fed Chair Jerome Powell and his assertion of influence over monetary policy. While the stock market reacted positively, the Fed has consistently maintained its independence from political pressure. Trump intends to communicate directly with Powell, despite lacking direct statutory control over the central bank.
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December’s US inflation rate rose to 2.9%, driven largely by a 40%+ surge in energy prices and a staggering 36%+ increase in egg prices due to avian flu. However, core inflation remained lower than anticipated at 3.2%, easing concerns of a renewed inflation wave. This relatively positive data, contrasting with strong job growth, created uncertainty regarding future Federal Reserve interest rate cuts. Market reactions were initially positive, but anxieties persist about potential inflationary pressures from upcoming policy changes.
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The Federal Reserve’s announcement of fewer-than-expected interest rate cuts in 2025 triggered a significant market downturn, with the S&P 500 experiencing one of its worst days of the year, falling 2.9%. This decision, driven by a robust job market and rising inflation, contrasts with earlier projections of more substantial cuts. The resulting increase in Treasury yields negatively impacted stocks, particularly those of smaller companies heavily reliant on borrowing. The shift reflects the Fed’s cautious approach amid economic uncertainties, including those potentially stemming from the incoming administration’s policies.
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Tesla and SpaceX CEO Elon Musk, a vocal supporter of President-elect Donald Trump, has endorsed the idea of allowing presidents to influence Federal Reserve policy, reflecting a growing pressure campaign against the central bank’s independence. This follows President-elect Trump’s repeated calls during his campaign to have a say in Fed policy, a departure from the traditional practice of maintaining the Fed’s autonomy to focus solely on the economic health of the United States. Musk’s agreement with Senator Mike Lee’s call to “#EndtheFed” suggests a potential shift in the relationship between the White House and the Federal Reserve under the new administration, echoing the contentious relationship that existed during Trump’s first term.
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Federal Reserve Chair Jerome Powell has stated he will not resign from his position, even if asked to do so by President-Elect Donald Trump. This declaration came during a press conference following a meeting of the Federal Reserve, where a reporter pointed out that some of Trump’s advisors have suggested Powell should step down. Powell’s firm “No” response to this question was followed by a clarification that he does not believe he is legally obligated to resign.
Further inquiries from journalists focused on the President’s authority to dismiss or demote Powell. The Fed Chair definitively stated that such actions are “not permitted under the law”.… Continue reading
The Federal Reserve’s recent decision to cut interest rates has sparked a wave of commentary, much of it focused on the timing of the announcement, just days after Donald Trump’s election victory. Many believe the headline is misleading, suggesting a connection between the two events that simply doesn’t exist.
The truth is, the Fed’s rate cut was anticipated and planned for months, long before the election. The decision was based on economic indicators and projections, not on the outcome of a political race. The rate cut was a pre-determined action, and it would have happened regardless of who won the election.… Continue reading
Trump’s first broken promise will be his promise of 3% mortgage rates. It’s a promise that simply can’t be kept, no matter how much he wants to. Getting interest rates down to 3% would require the Federal Reserve to purchase trillions of dollars in debt, which is unlikely to happen. The Fed is an independent entity, and the government doesn’t have the power to tell them what to do. The only way the government could influence interest rates is by balancing the budget, raising taxes, and cutting spending, which is not something his supporters would be happy about.
There’s a good chance that his supporters will begin to scapegoat certain demographics, like migrants, and ramp up the culture war to distract from his broken promises.… Continue reading
John Q. Hosedrinker 
Matt Underwood