Trump’s promise to tame inflation starting on “Day One” went pffft after the inflation report that just came out.
When he was still campaigning, President Trump unequivocally promised that he would tame inflation rapidly if elected, claiming, “when I win, I will immediately bring prices down, starting on Day One.”
So here, on Day Twenty Five since he was sworn in, I haven’t noticed much of a change in prices at my local grocery, drug and hardware stores. I’m realistic enough to know that Trump’s promise was made while he was in braggadocio mode, more figuratively than literally, but the words do invite a challenge. A recent major survey shows consumers don’t seem to be buying his rhetoric and, what should be even more unnerving to Trump, the bond markets don’t think much of his prospects for taming inflation either … but more on bonds in a minute.
First off, what is it that consumers are saying? A few days ago the New York Federal Reserve Bank released its January survey of consumer expectations, and respondents are saying they expect inflation to go up to the 3% level during their one-, three-, and five-year horizons. Trump’s repeated promises to bring inflation down don’t seem to have made much of a dent in people’s expectations.
A CBS poll a few days ago gave Trump generally good marks, but on inflation, “most Americans say the administration isn't focused enough on lowering prices.”
That “person on the street” sentiment conforms with what has been going on in the financial markets, where all the talk lately is about yields on longer term bonds, which have been rising even as shorter term rates have been recently coming down. You can find more technical discussions elsewhere about the disparity, but basically what is going on is that people who want to lend money for say, ten years or longer, expect returns that are higher than normal because inflation expectations are parts of their calculations.
This seems reasonable to me because Trump’s fixation on tariffs is generally, though not universally, seen as spurring inflation. Agreeing with the generally negative consensus about tariffs, the U.S. Senate Committee on the Budget last December (with Republicans in control of the senate) noted in its report on the subject that tariffs would boost inflation and shrink the economy.
As to Trump himself, he’s already backpedaling on the imminence of lower prices. “Day One” has morphed into Month One. Does anybody in the White House care about the situation? Other than blaming Biden for the bad inflation report that came out last Wednesday, Trump didn’t have anything to say about plans for making progress on price reduction. The administration that once promised results starting on “Day One” now doesn’t seem to be in a rush to make good on what was a signature campaign pledge. His press secretary even announced last week that when it comes to the fight against inflation, there is no timeline.
This is frustrating because not only is there no timeline, there doesn’t even seem to be a plan.
Now, with the great unknown of what will transpire if Trump follows through on his tariff proposals, inflation expectations are murkier than ever. The candidate who once boasted about taming inflation immediately upon taking office recently said that inflation is not his “top issue.”
With no plan in sight and a diminishing sense of urgency, the administration’s approach to what was once a top priority seems like indifference, if not neglect.
John Tsitrian is a businessman and writer from the Black Hills. He was a weekly columnist for the Rapid City Journal for 20 years. His articles and commentary have also appeared in The Los Angeles Times, The Denver Post and The Omaha World-Herald. Tsitrian served in the Marines for three years (1966-69), including a 13-month tour of duty as a radioman in Vietnam. Republish with permission.
Photo: public domain, wikimedia commons
