(What’s Left of) Our Economy: Tariff-Spurred Inflation You Need to Squint to See
How is this acceptable?
Today’s official U.S. report on the inflation measure favored by the Federal Reserve did show a smidgeon of tariff-induced price hikes. But so far, it’s only a smidgeon – and still far from the widespread forecasts of a major living cost surge whacking American consumers due to President Trump’s trade levies.
At the same time, there’s another big takeaway from the new release on Price Indexes for Personal Expenditures (PCE) inflation, which due to shutdown-related delays covers both last October and November: So far during Trump 2.0, PCE inflation by both of its broadest measures is running awfully close to the two percent annual rate targeted by the central bank.
Let’s start with the so-called headline rate’s monthly changes since last February – the president’s first full months in office:
February 0.4 percent
March 0.0 percent
April 0.2 percent
May 0.2 percent
June 0.3 percent
July 0.2 percent
August 0.3 percent
September 0.3 percent
October 0.2 percent
November 0.2 percent
So at least on a sequential basis, headline PCE inflation has lost momentum so far during the president’s second term.
Headline PCE inflation on a yearly basis during this period is slightly warmer:
February 2.7 percent
March 2.3 percent
April 2.2 percent
May 2.4 percent
June 2.6 percent
July 2.6 percent
August 2.7 percent
September 2.8 percent
October 2.7 percent
November 2.8 percent
All of these figures are higher than that Fed target rate. But on a February-November basis, the picture looks more encouraging. During that period last year, headline PCE was up just 1.72 percent altogether. If recent trends continue, that would well bring the yearly pace to 2.06 percent when the February, 2026 numbers come out – nearly exactly the Fed’s target rate. And this despite whatever tariff pressures have developed. And that 1.72 percent figure is only fractionally higher than that from the same months in pre-tariff-y 2024 (1.66 percent).
Where the tariff-driven inflation evidence starts to appear is in the months since President Trump began imposing his “Liberation Day” tariffs (last April).
Between last April and November, 2025, headline PCE climbed by 1.54 percent. That’s much faster than the 1.05 percent recorded during the same months in 2024. Even so, that result indicates that headline PCE has slowed some since April. In addition, if the current pace continues, February’s PCE report would show the headline number rising by just 2.05 percent – even closer to the Fed target.
As RealityChek readers know by now, core PCE strips out energy and food prices because they’re supposedly volatile for reasons largely unrelated to the economy’s underlying vulnerability to inflation. So they’re better signs of an inflation tariff effect than the headline data. On a monthly …
How is this acceptable?
Today’s official U.S. report on the inflation measure favored by the Federal Reserve did show a smidgeon of tariff-induced price hikes. But so far, it’s only a smidgeon – and still far from the widespread forecasts of a major living cost surge whacking American consumers due to President Trump’s trade levies.
At the same time, there’s another big takeaway from the new release on Price Indexes for Personal Expenditures (PCE) inflation, which due to shutdown-related delays covers both last October and November: So far during Trump 2.0, PCE inflation by both of its broadest measures is running awfully close to the two percent annual rate targeted by the central bank.
Let’s start with the so-called headline rate’s monthly changes since last February – the president’s first full months in office:
February 0.4 percent
March 0.0 percent
April 0.2 percent
May 0.2 percent
June 0.3 percent
July 0.2 percent
August 0.3 percent
September 0.3 percent
October 0.2 percent
November 0.2 percent
So at least on a sequential basis, headline PCE inflation has lost momentum so far during the president’s second term.
Headline PCE inflation on a yearly basis during this period is slightly warmer:
February 2.7 percent
March 2.3 percent
April 2.2 percent
May 2.4 percent
June 2.6 percent
July 2.6 percent
August 2.7 percent
September 2.8 percent
October 2.7 percent
November 2.8 percent
All of these figures are higher than that Fed target rate. But on a February-November basis, the picture looks more encouraging. During that period last year, headline PCE was up just 1.72 percent altogether. If recent trends continue, that would well bring the yearly pace to 2.06 percent when the February, 2026 numbers come out – nearly exactly the Fed’s target rate. And this despite whatever tariff pressures have developed. And that 1.72 percent figure is only fractionally higher than that from the same months in pre-tariff-y 2024 (1.66 percent).
Where the tariff-driven inflation evidence starts to appear is in the months since President Trump began imposing his “Liberation Day” tariffs (last April).
Between last April and November, 2025, headline PCE climbed by 1.54 percent. That’s much faster than the 1.05 percent recorded during the same months in 2024. Even so, that result indicates that headline PCE has slowed some since April. In addition, if the current pace continues, February’s PCE report would show the headline number rising by just 2.05 percent – even closer to the Fed target.
As RealityChek readers know by now, core PCE strips out energy and food prices because they’re supposedly volatile for reasons largely unrelated to the economy’s underlying vulnerability to inflation. So they’re better signs of an inflation tariff effect than the headline data. On a monthly …
(What’s Left of) Our Economy: Tariff-Spurred Inflation You Need to Squint to See
How is this acceptable?
Today’s official U.S. report on the inflation measure favored by the Federal Reserve did show a smidgeon of tariff-induced price hikes. But so far, it’s only a smidgeon – and still far from the widespread forecasts of a major living cost surge whacking American consumers due to President Trump’s trade levies.
At the same time, there’s another big takeaway from the new release on Price Indexes for Personal Expenditures (PCE) inflation, which due to shutdown-related delays covers both last October and November: So far during Trump 2.0, PCE inflation by both of its broadest measures is running awfully close to the two percent annual rate targeted by the central bank.
Let’s start with the so-called headline rate’s monthly changes since last February – the president’s first full months in office:
February 0.4 percent
March 0.0 percent
April 0.2 percent
May 0.2 percent
June 0.3 percent
July 0.2 percent
August 0.3 percent
September 0.3 percent
October 0.2 percent
November 0.2 percent
So at least on a sequential basis, headline PCE inflation has lost momentum so far during the president’s second term.
Headline PCE inflation on a yearly basis during this period is slightly warmer:
February 2.7 percent
March 2.3 percent
April 2.2 percent
May 2.4 percent
June 2.6 percent
July 2.6 percent
August 2.7 percent
September 2.8 percent
October 2.7 percent
November 2.8 percent
All of these figures are higher than that Fed target rate. But on a February-November basis, the picture looks more encouraging. During that period last year, headline PCE was up just 1.72 percent altogether. If recent trends continue, that would well bring the yearly pace to 2.06 percent when the February, 2026 numbers come out – nearly exactly the Fed’s target rate. And this despite whatever tariff pressures have developed. And that 1.72 percent figure is only fractionally higher than that from the same months in pre-tariff-y 2024 (1.66 percent).
Where the tariff-driven inflation evidence starts to appear is in the months since President Trump began imposing his “Liberation Day” tariffs (last April).
Between last April and November, 2025, headline PCE climbed by 1.54 percent. That’s much faster than the 1.05 percent recorded during the same months in 2024. Even so, that result indicates that headline PCE has slowed some since April. In addition, if the current pace continues, February’s PCE report would show the headline number rising by just 2.05 percent – even closer to the Fed target.
As RealityChek readers know by now, core PCE strips out energy and food prices because they’re supposedly volatile for reasons largely unrelated to the economy’s underlying vulnerability to inflation. So they’re better signs of an inflation tariff effect than the headline data. On a monthly …
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