Guess what! Inflation, growth, jobs: Conventional wisdom from America’s economic punditry was across-the-board wrong. Again.
At the year’s start the punditry predicted that Trump’s tariffs would cause a surge of inflation and would likely trigger recession. Well, the Bureau of Labor Statistics (BLS) released Consumer Price Index (CPI) numbers on Thursday. Reuters’ polling of private economists predicted inflation would accelerate to 3.1% year-over-year, the fastest pace since 2023. The actual BLS figure came in at 2.7%, with core inflation even lower at 2.6%.
But the news gets better. Year-over-year inflation means it includes inflationary pressures from the end of Biden’s presidency. It’s a very lagging figure.
To understand what inflation’s doing now, and to filter out some of the data’s noise, a better gauge is to look at inflation over the last two months, which came in at 1.2% annualized, well below the Federal Reserve’s 2% target.
There is a small caveat to this good news. Due to the Schumer government shutdown, BLS was unable to collect all the usual data for the CPI report, so some items were left out. The economists who predicted accelerating inflation are thus arguing that inflation would, with all the data, have been much higher and thus excusing their bad forecasts.
However, as New York Fed President John Williams points out, the missing data “pushed down the CPI reading, probably by a tenth or so.” OK, so topline inflation was 2.8% while the annualized two-month figure goes to 1.8%, still well below consensus forecast and still below the Fed’s target rate.
What about Trump’s tariffs? To be sure, they pushed some prices up faster than they otherwise would have. But the tariffs only applied to a small fraction of all the goods and services sold in America. So, when it comes to overall inflation, the net effect could never be more than a one-time rounding error.
Further, inflation is fundamentally a monetary phenomenon. These tariff-induced price bumps occurred against a background of the underlying inflationary impulse from money supply interacting with money demand. The Fed has run a moderately restrictive policy for years, so naturally inflation is falling.
Assuming at least one of the Fed’s legion of economists can do this two-month calculation and has the temerity to show it to Chair Powell and the rest of the Fed’s leadership, then further Fed rate cuts should be assured and imminent on the road to neutral.
And what about that predicted recession? After inflation, Gross Domestic Product (GDP) soared 3.8% in the second quarter of this year, while the Atlanta Fed’s “Nowcast” of third quarter GDP is a still-impressive 3.5%.
Some of Reuters’ economists will likely portray this slight slowdown in growth as “scary” and a sign of pending recession. Nonsense. The economy is ripping, with the only recession pending threatening the salaries of those economists making silly forecasts.
Finally, those still desperate to argue economic weakness might turn to the labor market. The economy generated about 166,000 jobs a month during Biden’s last year in office. So far under Trump the economy has generated about 50,000 jobs a month. Sounds scary, but much of that decline occurred because federal employment fell by 27,000 jobs a month.
The even bigger jobs story is that employment by foreign-born workers has fallen by about 100,000 a month under Trump. This is what happens when immigration laws are enforced and the border is secured. Put it all together and private-sector native-born employment is doing very well.
And the cherry on top is that after stagnating for the four years of the Biden presidency, median real wages are now rising at a 1.6% annualized rate. Rising wages and plentiful private-sector jobs, not gimmicks like Obamacare subsidies and rent controls, are how you prosper American workers or, in today’s parlance, address “affordability.”
Just don’t be surprised if you don’t hear that from the legacy media.
J.D. Foster is a contributor to the Daily Caller News Foundation. He is the former chief economist at the Office of Management and Budget and former chief economist and senior vice president at the U.S. Chamber of Commerce. He now resides in relative freedom in the hills of Idaho.
Arizona Republican Congressman Abraham Hamadeh (R-AZ08) issued a call this week for Jerome Powell, Chairman of the Federal Reserve, to resign. Hamadeh cited a series of failures from Powell in an official Congressional letter sent on Sunday.
“My call for Chairman Powell’s resignation does not come lightly nor without good cause,” stated Congressman Hamadeh. “Considering the recent revelations by Office of Management and Budget Director Russell Vought about Chairman Powell’s gross mismanagement of the Federal Reserve’s headquarters renovation project, and his apparent lack of candor before the Senate Banking Committee, neither does my call come too soon.”
In a post to X Monday, Hamadeh further stated, “Jerome Powell has lost the confidence and ability to effectively Chair the Federal Reserve.”
My call for Chairman Powell’s resignation does not come lightly nor without good cause. Jerome Powell has lost the confidence and ability to effectively Chair the Federal Reserve. https://t.co/khyPnPPKfX
Senators pressed Powell hard on the ongoing $2.5 billion renovation of the Fed’s headquarters during the Chairman’s semiannual monetary policy hearing before Congress in June. Sen. Tim Scott (R-SC) critcized Powell for the renovations, referring to them as “luxury upgrades that feel more like they belong in the Palace of Versailles.”
James Blair, a White House deputy chief of staff, announced in a post to X, “The Federal Reserve’s Inspector General is considering opening an investigation into the massive cost overruns for their $2.5B+ HQ renovation project.”
Blair was appointed to the National Capital Planning Commission which holds oversight over the project last week.
🚨 BREAKING: The Federal Reserve’s Inspector General is considering opening an investigation into the massive cost overruns for their $2.5B+ HQ renovation project – which has been called the “Taj Mahal at the National Mall”.
In his letter calling for Powell to step down, Congressman Hamadeh echoed the words of Director Vought, who questioned the “ostentatious” overhaul of the Federal Reserve Campus and also cited the Chairman’s “failure to accurately assess the effects of tariffs” and “refusal to lower interest rates for the good of the nation in a timely manner,” as causes. He added, “This renovation is $700 million over budget at a time when your political game playing is wreaking havoc with Americans’ budgets. In fact, it is your failure at the Fed that has caused home ownership to be cost prohibitive for too many young families, denying them access to one of the most important facets of the American Dream.”
Hamadeh continued by highlighting Powell’s failed predications on the Trump administration’s tariff system.
He wrote, “Aside from the burden you have placed on taxpayers, who must foot the bill for your frivolous fabrications, you have failed to properly assess the impact of President Donald Trump’s tariff policy. Contrary to your predictions, increasing tariff collections are helping improve government finances with the U.S. Treasury Department posting a $27 billion budget surplus in June 2025.”
Hamadeh acknowledged that “White House economic adviser Kevin Hassett has said that President Trump has the authority to fire Chairman Powell for cause,” but added that “it shouldn’t have to come to that.”
He concluded, “Chairman Powell needs to accept the fact that his political game playing has led to harmful failures and step down for the good of the country.”
While the White House touts the success of “Bidenomics,” American families are drowning in debt, especially on credit cards. The latest data from the Federal Reserve Bank of New York show Americans ended the first half of this year with over a trillion dollars of credit card debt for the first time ever. At the same time, credit card interest rates are at record highs, pushing many Americans to the financial brink.
How we got here is a lesson in basic economics, something the Biden administration has willfully ignored.
Contrary to the White House talking points, President Joe Biden did not inherit a “reeling” economy and inflation was not “already there.” When he entered the Oval Office, the economy was growing at a $1.5 trillion annualized rate and inflation was 1.4 percent, comfortably below the Federal Reserve’s target inflation rate. But Bidenomics changed all that.
In just a year and a half, Mr. Biden managed to deliver two consecutive quarters of negative economic growth (a recession). Moreover, inflation reached 40-year highs, with prices rising in a single month about as fast as they rose in the entire year before Biden took office.
This is the bitter fruit of the Bidenomics tree. The seed was trillions of dollars in excessive government spending; it was watered with trillions of borrowed dollars and fertilized by the Fed’s printing trillions of dollars. The results are fast-growing prices, a sluggish economy, and family budgets getting squeezed.
Since Mr. Biden took office, prices have risen about 16 percent, but average hourly wages have risen less than 13 percent, and average weekly hours have been cut back. That has left the average American with an effective pay cut of about 5 percent, and families have been using credit cards to make up for that lost purchasing power.
In just two and a half years, outstanding credit card balances have exploded 34 percent, but it gets worse—much worse. The Fed has been steadily raising interest rates to combat the very inflation which it helped cause. That has pushed up borrowing costs, especially on credit cards; their average interest rate is now at an all-time high.
The combination of large balances and high interest rates is a financial death spiral for many American families. When the financing charges on your credit card bill are equal to or greater than what you can afford to pay each month, it becomes impossible to pay down your balance. You are effectively trapped in debt. On top of the higher cost of living, you’re now paying higher financing charges too.
And it’s not just credit card debt that has exploded during Bidenomics. Consumer spending during the last two years has been partly fueled by higher balances for auto loans and mortgages, the latter of which has grown almost $2 trillion in just two and a half years.
Mr. Biden’s false promises of a student loan bailout along with a moratorium on student loan payments have also encouraged young people to take on additional debt for schooling and not pay those loans back. In fact, instead of using the savings from the moratorium to responsibly pay down their debt, most borrowers have been further increasing consumer spending.
American families going deeper into debt is a hallmark of Bidenomics, so much so that even members of Mr. Biden’s administration are beginning to say the quiet part out loud. Vice President Kamala Harris recently claimed that most Americans would go “bankrupt” if they had a $400 emergency expense.
While there is no evidence to support Ms. Harris’ claim, her statement is an indictment of the administration’s economic agenda. For most Americans, a much more likely scenario than bankruptcy is that they would have to put that emergency expense on a credit card—which many families have already had to do.
The squeeze on Americans’ family budgets will continue until we clean up the federal budget. If Washington doesn’t cut trillions of dollars in spending, the bills will keep piling up, both at the Treasury, and in your mailbox.
E.J. Antoni is a contributor to The Daily Caller News Foundation, a public finance economist at The Heritage Foundation, and a senior fellow at Committee to Unleash Prosperity.
Federally regulated banks across the United States have about 100 days to get familiar with a new rule that requires the reporting of cyberattacks and other computer security incidents to regulators within 36 hours and “as soon as possible” to customers if the incident might materially affect operations for at least four hours.
The rule announced by the Federal Reserve Board of Governors (Fed), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) last month takes effect April 1. It applies to banking organizations such as national banks, federal savings associations, state member banks, U.S. operations of foreign banking organizations, federal branches and agencies of foreign banks, and U.S. bank holding companies and savings and loan holding companies.
Under the new rule, reportable cyber incidents are those causing “actual harm” with respect to the availability, confidentiality, or integrity of a banking organization’s information system or the information that the system processes, stores or transmits. As a result, notification will not be required if an incident only threatens to cause a harm.
A banking organization’s service providers are also subject to the rule, which will now require notification by a service provider to the banking organization of incidents which has caused “or is reasonably likely to cause” a service interruption of four or more hours.
Federal banking officials concede the new reporting requirement won’t stop cyberattacks on the nation’s banks. It won’t even serve as a speed bump in such criminal activity.
What it will do, according to industry newsletter Banking Exchange, is give regulators and federal law enforcement officials a better chance of tracking attacks, identifying patterns, and ensuring local bank executives are doing their part to protect customer data and assets.
Some types of computer incidents involve new account or wire fraud, account penetration or takeovers, and malicious attacks such as ransomware. The disruption or degradation of a banking organization’s operations which would pose a threat to the country’s financial stability will also trigger the new reporting regulation.
OneSpan, a cybersecurity company specializing in banking, recently released its Global Financial Regulations Report which notes the main challenges for banking organization are reducing or preventing cyberattacks, safeguarding sensitive internal and customer data, and keeping up with changes in consumer privacy laws and industry rules.
The new banking regulation emphasizes material disruptions such as denial-of-service (DOS) attacks or data hacking incursions which limit or shutdown a banking organization’s operations regardless of whether customer information is compromised. However, some cyberattacks may also be subject to supplementary reporting under other federal or state laws.
Instructions will be sent to all regulated banks in early 2022 on when and how to process a notification.
