Not day 1 or day 300: Trump hasn’t fixed inflation and prices are going up

One of the driving forces behind Democrats’ sweeping victories in the off-year elections earlier this month was Americans’ frustration over a lack of affordability. The same issue helped Donald Trump and his fellow Republicans win just a year before.

President Trump had vowed during the 2024 campaign to bring prices down on day one. But like President Biden before him, he’s finding it’s easier said than done. While he claims that there is no inflation, the official data tells a different story, and Americans can see with their own eyes when they walk into a supermarket.

Inflation continues despite Trump’s promise to lower prices

The longest government shutdown in United States history finally ended last week. The 43-day-long affair delayed the release of official federal data on the state of the economy.

Only the September Consumer Price Index report was published which showed inflation rose by 3% year-over-year. That’s the same rate as when he came into office.

There are concerns though that the data for October will be incomplete, if it is ever released. The White House has said that it may never be put out due to the shutdown. The Cleveland Fed nowcast, however, suggests that year-over-year CPI increased by around 2.96%.

Even so, Trump is still trying to message that there are better times ahead. “We’re going to be hitting 1.5% pretty soon. It’s all coming down,” the president told reporters Monday.

Trump’s inflation fighting plans may not deliver

Trump has put forward some ideas to ease the affordability crisis for Americans. However, his plans that might help that happen could take time and others would have the opposite effect.

At the end of last week, Trump rescinded some of his tariffs, which have been helping to drive inflation, something Trump mildly admitted saying, tariffs “may” have increased prices “in some cases.” The annual CPI rate was 2.3% when he announced his rash of new tariffs.

Trump says that his tariffs have brought in trillions of dollars in revenue, but the Treasury reported that as of 30 September, just $195 billion has been collected this year from all customs duties. No matter, the president has big plans for that money, proposing using tariff funds to pay for a number of programs including a $2,000 tariff dividend check.

But such a giveaway, depending on how it is targeted, could add up to roughly $300 billion dollars, according to estimates by Erica York, vice president of tax policy at the Tax Foundation. Furthermore, even if there were enough funds to follow through, it would most likely drive more inflation.

The same goes for another proposal that got thrashed by economists and the MAGA base, creating 50-year mortgages. Detractors say the meager savings on monthly payments would make home loans more costly in the long run and could drive housing prices even higher as the affordability problem is being driven by a lack of supply.

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