The CPI came out today and now that Trump is in office, it has suddenly turned terrible. Nevermind, it is for January, so remarkable for just 11 days in office. /s
The media's memory is a bit wacky, with claims that it has suddenly shifted upward, even though the lowest annual rate since February 2021 was this past September.
A trip down memory lane...
The real earnings report has been ignored and for good reason... weekly wages, when adjusted for inflation have now fallen back to June, 2024 levels. That's seven months, since weekly wages adjusted for inflation have been this low.
Note: The BLS reports both CPI and Real Earnings.
As for the energy report from the EIA, not much in extreme changes. Pump prices will likely rise, but should be noted... still below year ago levels. Of course, the rise will become political, as everything else.
Tariffs... A lot of talk about the damaging effects of tariffs, but the whole matter of FTZ status of dozens of companies have been ignored. A FTZ or "Foreign Trade Zone" status, means a company pays no tariffs, until the end product is sold to the public. There are many large and small companies with FTZs, which include energy companies (refineries, etc.) and automobile companies with their component assemblies.
Once you understand the magnitude of FTZs, then you should consider that tariffs have long been in existence.
Another serious argument put forth by many... is the Smoot Hawley act devastated the U.S. Economy during the depression, or at least made it worse. Not sure correlation was causation for this period. It does give the trade aficionados a talking point.
Yes, tariffs will cause inflation. However, off shoring of goods was a primary reason for the erosion of the middle class in the U.S. We basically beat inflation, by utilizing cheap foreign labor. We cannot hope to restore the middle class, without reshoring.
It really is that simple.
