The stories you want. The opinions that matter.
No, thanks
Tag: inflation
Kevin Warsh

Trump Adds His Newly Appointed Fed Chair To His (Long) Enemies List

I had intended to write on the Fed’s decision to raise rates, but I don’t have much to add to what I wrote last week. I do think inflation is high, and for the moment the labor market seems reasonably healthy. But I don’t see higher rates as being a useful way to combat inflation caused by tariffs and Trump’s war on Iran.

As I noted, there is no case for the sort of wage-price spiral we saw in the 1970s. Wage growth has actually slowed sharply over the last two years. Wages had been growing at over a 4.0 percent annual rate in 2023 and 2024. The year-over-year rate has fallen to 3.1 percent. The annualized rate, comparing the average for the last three months (June-August) with the prior three (March-May), is just 2.7 percent. And this comes as inflation has accelerated from just over 2.0 percent to more than 3.0 percent.

Given little risk of accelerating inflation, at least from excessive demand, there seems little point in pushing rates higher. The one qualification I would make to this assessment is that expectations of a rate hike had become so embedded, especially following Fed Chair Kevin Warsh’s comments at the annual Jackson Hole conference, that it is likely long-term rates would go up more if the Fed held rates unchanged than if they hiked. Given that situation, I guess I would have gone with the hike.

But the bigger news yesterday was President Trump’s response. For some time, Trump has been pushing a bizarre theory that because we have the hottest economy (we don’t), we should have the lowest interest rates. This makes no sense, because the normal practice is to lower rates when the economy is weak, and raise them when it’s strong.

Apart from Trump’s confusion on the economics, the bigger story was that he immediately added the Fed to his enemies list, saying the rate hike was part of a grand conspiracy to make him look bad. This is more than a bit incredible, first and foremost because Trump had just appointed Kevin Warsh as Fed chair this spring. Apparently, Trump believes that his pick has already turned on him and joined the enemy.

And it wasn’t just Warsh; the vote was unanimous. That means that all four of the people who Trump appointed to the Fed, including his previous pick as Fed chair, Jerome Powell, lined up against him.

This follows Trump’s loss at the Supreme Court on his plan to have the Postal Service screen voter lists for mail-in ballots in the November elections. In that case, all three of Trump’s picks to the Court lined up against him, upholding a stay from a lower court that prohibited Trump’s plan from going into effect.

Trump complained that the justices “are not the people I interviewed.” He said that the court was giving in to crazy liberal influence.

It’s not new that Trump sees anyone who disagrees with him as part of a conspiracy. He’s long accused judges on lower courts of conspiring to undermine his agenda. And Trump regularly accuses any reporter who writes a critical story or asks a tough question as being “fake news.” And when polls show his popularity falling, Trump denounces them as “fake polls.”

But it seems a step further that Trump says people that he appointed, in some cases recently, have now joined the grand anti-Trump conspiracy. If Trump were not the president of the United States, we could just see this as part of an over-the-top comedy. Unfortunately, we don’t have that option.

In fact, the revenge Trump is floating for the Fed’s rate hike is pretty scary. He suggested that he will simply stop trading with arbitrarily chosen countries with whom we have a trade deficit. Trump seems to have a theory whereby we are losing money with a country, if we run a trade deficit with them. This makes as much sense as saying I lose money every time I go to the grocery store and pay them for the food.

But Trump is a reality TV show star, not someone who has even the most basic understanding of economics. Shutting down trade with a major trading partner would be a further jolt to the high prices that people are already upset over. It’s pretty horrible economics and doesn’t sound like very good politics, but I guess it will make Donald Trump feel tough.

It’s not clear Trump has the authority to arbitrarily impose trade embargos on other countries. But if the Supreme Court follows its recent path with tariffs, it will let Trump impose his embargo and then maybe wait a year or so before deciding it’s unconstitutional.

That will be bad news for families paying higher prices and the countries that have to reorient their economies, but at least it should further convince those who are still unconvinced that our president is completely out of his gourd. Other countries need to plan economic and defense relationships that do not involve the United States. At this point, we are not a credible country.

Dean Baker is a senior economist at the Center for Economic and Policy Research and the author of the 2016 book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Please consider subscribing to his Substack, from which this is reprinted with permission.

Don't Expect Foreign Nations To Pay Trump's Tariffs (They're Still A Tax On You)

Don't Expect Foreign Nations To Pay Trump's Tariffs (They're Still A Tax On You)

As we all know, Donald Trump likes to play the tough guy. Unfortunately, he often does it in really foolish ways, and this time I’m not talking about his war against Iran.

I’m talking about Trump’s tariffs. From the way he talks, he seems to think that foreign countries are sending us checks equal to the tariffs he has imposed on U.S. imports from them. Donald Trump’s mind can be a scary place, so it’s not worth trying to tease out his thought process, except to point out that the idea that foreigners are sending us checks is absurd.

The tariffs are collected here when the goods show up at a customs office. The party paying the tariff most immediately is the importer. The importer could be a wholesaler who may resell it to a retail store, manufacturer, or other business. Or in many cases, it will be a larger retailer like Amazon or Walmart, who arrange for the imports directly.

Either way, it is someone at this end who is most immediately out the money for the tariff. Some of what they pay will be passed on to their customers. To some extent, they will be forced to eat the tariff and make lower profits. (The evidence is that most is passed on.) But in both cases, consumers or companies here are paying the tariff.

The only way that foreign countries would pay the tariff is if the price of the goods they export to the United States falls as a result of the tariff.

We got new evidence on that story on Friday, as the Bureau of Labor Statistics released data on import prices for June. The release showed non-fuel import prices were up 0.4 percent in June and 4.2 percent year-over-year (YOY).

Just to be clear on what these numbers mean, these are prices before any tariffs are applied. That means if the average tariff rate is 10%, then we are paying 14.2 percent more for our imports in June of 2026 than in June of 2025. That doesn’t look like a story where exporters are eating the tariffs.

It is worth noting that this is a change from past patterns. Import prices were actually falling in 2023 and rising slowly in 2024. There are a variety of factors affecting the price of producing goods elsewhere, including Trump’s war in Iran, but in any case, the story with import prices looks worse than before Trump took office, even before we consider the impact of the tariffs.

Looking across countries, it is hard to find evidence that anyone is eating Trump’s tariffs. The price of imports from the EU is up 3.7 percent YOY. The price of imported manufactured goods from Canada is up 10.3 percent. And the price of goods from China is up 1.3 percent.

While the story should have already been clear, the new data just further shore up the case. When Trump threatens countries with big tariffs, he is threatening the American people with big taxes.

This point should be made more clearly in reporting. For example, it is misleading to say that Trump is threatening to hit Brazil, Canada, or whoever with new tariffs. He is threatening to impose taxes on goods that Americans import from these countries. That would make it clear what is at stake.

We may never know, or care, what is in Trump’s head, but we have never seen a president who is so happy to raise people’s taxes.

Dean Baker is a senior economist at the Center for Economic and Policy Research and the author of the 2016 book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Please consider subscribing to his Substack.

Mainstream Media Still Doesn't Know What To Do With Trump's Big Lies

Mainstream Media Still Doesn't Know What To Do With Trump's Big Lies

A few days ago the Wall Street Journal published an oped by President Trump wherein he argued how great the US economy is on his watch and why tariffs are the main reason for that greatness. It’s a steaming mess of an argument, a firehose of falsehoods, though the one upside is that I haven’t seen it referenced anywhere. It sunk like a stone under the weight of its lies.

I won’t go through them here (though I’m about to link to a strong rebuttal), as it would be a waste of both of our times. Also, as you’d expect, it’s a greatest hits album with all the golden oldies he constantly blathers on about: inflation is zero (vs. 2.7 percent in the last CPI reading), prices are down, foreigners have invested “$18 trillion!” in America (that would be 60 percent of GDP; biz investment is currently 14 percent of GDP). The irony is that, as I’ve often stressed in these pages, the macro economy is, in fact, quite solid, even if the job market has worrisomely softened.

By far, the most potentially consequential macro development over the past few years is faster productivity growth. If that sticks—if we’re really, lastingly generating more output per hour of work—it means the US economy can grow faster without worrying about inflation picking up. Of course, there’s no guarantee that faster growth reaches working-class people in the form of higher wages, income, wealth; often, it has not. But those are all other discussions.

At any rate, I saw no reference to this hot mess until this morning, when a prominent newspaper ran a fulsome rebuttal to Trump’s claims. This new piece points out that solid research shows that, of course, tariffs have not been absorbed by exporters but passed through to American businesses and consumers, generating higher prices on those imports, hurting investment, and making production more, not less, expensive for our own manufactures, who have been aggressively shedding jobs (half of our imports are inputs into domestic production).

That prominent newspaper is the same Wall Street Journal that published Trump’s oped.

What should one make of this? How is one supposed to process the fact that the media publishes, without criticism or an accompanying fact check, a cascade of outright lies, only to rebut it a few days later? What does that say about our collective understanding of reality? And what should the WSJ have done in this case?

If you’re a newspaper with an oped page, and the President gives you an oped, you can argue that such a piece is de facto newsworthy. As the Journal editors themselves said in their rebuttal, “We thought we owed him the opportunity after our criticism of his tariffs.”

But unless his argument is fact-based and substantive, that’s ridiculous. The WSJ’s criticism of Trump’s tariffs has been wholly fact-driven—they’re consistently done great work on this, and I say that as someone whose ideology differs sharply from that of this ed board. If they say 2+2=4, nobody, not even the president, gets to pushback with 2+2=5.

I give them some credit for coming back with “no, it’s 4.” But that doesn’t fix what’s broken here.

I had a similar complaint about the New York Times' recent big-deal interview with Trump in the Oval. You can listen to the recording. They ask a question. He lies. They move on to the next question.

The only way to understand this is as performance art. It’s not a discussion about reality, facts, how policies play out in the real world. It’s a game, wherein Trump describes his alt reality and the media prints it because he’s the president and his reality matters. Which is true. It matters a lot and it’s one of the main reasons we’re in the mess we’re in. Never before has a president and his whole operation been so detached from reality, to the point wherein we see horrific things with our own eyes and they immediately say “no, that’s not what happened.”

But this is not benign, cute, or harmless. It’s not “oh, there he goes again! Whaddya gonna do? He’s the POTUS! You’ve got to run it.” It’s not just another flavor of our intense partisanship. It’s corrosive at best and fatal to democracy at worst. Allowing this false reality to fester has now been shown to be literally fatal to our fellow citizens.

I’m not a media expert, and I’m well aware that they’re in the business of selling news, and that clickbait = $ (though again, no one seemed to pick up on Trump’s op-ed). But there is no question in my mind that publishing falsehoods, even from the president—especially from the president—is not worth the money.

You may be thinking, “hey, it’s the op-ed page, not a column.” Well, I’ve written lots of op-eds and in every case, the editors insist that facts be verified. I’m not the president, but there’s absolutely no reason that the same rules shouldn’t apply.

Yes, of course, they have to cover him. But not like this.

Jared Bernstein is a former chair of the White House Council of Economic Advisers under President Joe Biden. He is a senior fellow at the Council on Budget and Policy Priorities. Please consider subscribing to his Substack.

Reprinted with permission from Econjared.

Sorry Mr. President, But The Affordability Crisis Isn't A 'Hoax'

Sorry Mr. President, But The Affordability Crisis Isn't A 'Hoax'

It was yet another performance that left us wondering about President Donald Trump’s failing mental faculties. Speaking to supporters at a rally in Mount Pocono, Pennsylvania last week, Trump was typically unhinged.

And we have two price charts. Do you remember the last time I pointed to a chart? I don't care what these charts say. My all-time favorite chart was the chart I had in Butler. I said, "Let's look at the chart." I don't care how good that chart looks, it's shit by comparison to the one in… It's nothing. I like the Butler chart. Remember that was on how great employment was and all this, but I like it for other reasons. Look at that chart. It's good. But now that I talk about the Butler chart, I don't even want to look at it, doesn't mean anything. But look, Biden price increases and Trump price increases. Look at Biden. Up 37, 24%, 22, 21, 30.7, 30.7 again, 10.4%, 49%. Trump, the price is down 5.1, 4.2, 0.5, down 4%, 2.9. Look at that. Our prices are coming down. Their prices, it's a hoax. They're just … Remember they said the Inflation Reduction Act, remember that? Billions and billions, hundreds of billions of dollars, the inflation, and after they got it approved, because we had a few Republicans that went along with that whole hoax.

If there was a coherent thought buried in all that gibberish, he later tried to summarize it this way: “Prices are coming down very substantially. But they have a new word. They always have a hoax. The new word is affordability.”

He can call it a hoax all he wants, but Trump and his team know affordability is a real problem. That’s why he’s suddenly trying to co-opt the term, like a cringe Truth Social post declaring himself “THE AFFORDABILITY PRESIDENT.” It’s also why his team has sent him out on what it’s calling an “affordability tour,” which is how he ended up in Mount Pocono at the Mount Airy Casino Resort. The largest ballroom there holds about 1,200 people—a telling choice by a campaign clearly afraid of empty seats at a sizable venue.

What should worry Republicans is not just the optics, but the substance. A rally supposedly designed to counter Democratic attacks on affordability instead showcased Trump creating an entire alternate reality.

“We’re getting inflation,” he said. “We’re crushing it, and you’re getting much higher wages. I mean, the only thing that’s really going up big, it’s called the stock market and your 401(k)s that’s going up.”

That line should sound familiar, because Democrats already tried it—and paid the price. President Joe Biden and Vice President Kamala Harris spent much of the 2024 campaign insisting the economy was strong, that inflation was cooling, that wages were up, and that voters simply didn’t understand how good things really were.

Voters didn’t buy it. Telling people they’re wrong about their own financial stress is a losing message, no matter which party delivers it.

Trump is now making the exact same mistake, only he’s louder and more detached from the lives of the people he claims to be fighting for. Instead of acknowledging the pain people are actually feeling, he reached for a familiar crutch: bragging about the stock market, as if that is supposed to mean something to an audience in Appalachia or to anyone struggling to pay rent or buy groceries.

And he couldn’t stop.

“The stock market has set 51, this is in less than 10 months,” Trump said. “The stock market has set 51 all-time record highs. There’s never been anything like that. Bum, bum, bum, bum, bum, bum.” He repeated the claim again for good measure.

Then came a reprise of the “let them eat cake” routine he’s been workshopping for a while. After bizarrely claiming that without his tariffs “you would have no steel,” Trump explained that Americans should simply do without other consumer goods.

“You can give up certain products. You can give up pencils because under the China policy, every child can get 37 pencils. They only need one or two,” he said. “You don’t need 37 dolls for your daughter. Two or three is nice, but you don’t need 37 dolls.”

It’s remarkable watching so many cultish conservatives swing from “Don’t tread on me” to “Please daddy Trump, tell me how many dolls my daughter can have.” For the broader electorate, though, this message is political poison.

Shop our Store

Constitution Cork Coaster

Constitution Cork Coaster

Democracy Mug

Democracy Mug

Make America Think Again Hat

Make America Think Again Hat

Constitution Rocks Glass

Constitution Rocks Glass

Headlines

'Fox & Friends' Keeps Pushing Trump To Expand Iran war To Yemen

'Fox & Friends' Keeps Pushing Trump To Expand Iran war To Yemen

jon husted

Backing Data Centers, Ohio Republican Took Over $600K From Big Tech

Macron and Trump

Enraged By Rate Hike, Trump Threatens To Expand Trade War Again (Huh?)

David Jolly

Shock Poll Shows Democrat Jumping Ahead In Florida Governor's Race

Editor's Blog

Ignorance Plus Arrogance: What The Real 'Trump Derangement Syndrome' Has Wrought

What We Never Learned From 9/11 Now Jeopardizes Our Security Every Day

Will The Supreme Court Majority Enable Election Theft To Protect Itself?

The World's Most Powerful Man, Still Stuck In America's Most Stupid War

Trending

'Fox & Friends' Keeps Pushing Trump To Expand Iran war To Yemen

Backing Data Centers, Ohio Republican Took Over $600K From Big Tech

Enraged By Rate Hike, Trump Threatens To Expand Trade War Again (Huh?)

World

'Fox & Friends' Keeps Pushing Trump To Expand Iran war To Yemen

Right-Wing Media Mock AI Concerns By Citing Climate 'Alarmism' And COVID 'Hysteria'

The World's Most Powerful Man, Still Stuck In America's Most Stupid War

Trump's Most Humiliating Lie In Election Speech Wasn't About U.S. Elections

In Mideast, Dropping Diplomacy For Bloodshed Is Bad Policy And Stupid Politics

Trump Opens NATO Summit By Renewing Demand To Annex Greenland