Washington
CNN
–
Inflation is being taken up again, and President Donald Trump said this week it was his predecessor’s fault. But no matter who denies inflation, America’s economic mood is sour. And Trump is getting the heat for it.
The latest University of Michigan survey released Friday showed US consumer sentiment fell in February in February, when a sharp 10% decline from January, according to the final reading. I did. This was twice the decline initially reported earlier this month.
It’s a surprising aspect after American consumers and businesses are (easy) hopeful (easy) hopeful about the future of the economy after Trump’s election in November. The latest decline in consumer sentiment was driven by Trump’s tariff concerns could raise prices.
A new CNN poll released Thursday also showed pessimism that is rising due to prices. Nearly two-thirds of US adults nationwide, 62%, feel that Trump is not enough to deal with inflation. A Michigan survey showed that Americans now fear higher inflation on the horizon.
On the campaign trail, Trump has promised to “down prices from day one.” Obviously, that didn’t happen. In January, consumer prices rose at the fastest monthly rate since August 2023, up 0.5% from December.
“It’s largely imminent, largely due to fear that tariffs are imminent,” said Joan Huss, director of the investigation at Michigan.
However, emotional changes are beginning to diverge based on political affiliation.
“The sentiment has declined for both Democrats and independents, but for Republicans it remains the same, reflecting on the ongoing differences of opinion regarding the outcome of the new economic policy,” she said.
Inflation Jitter, Future, and FRB
According to various consumer and polls, the Trump administration’s aggressive approach to tariffs is the main reason for the sour attitudes about the economy.
So far, the administration has implemented a full 10% tariff on all Chinese products and has announced a 25% tariff on all steel and aluminum imports without exception. We are also studying how best to apply “mutual tariffs” to American trading partners that may come in early April. Trump also maintains 25% tariffs on the table for Mexico and Canada. The move is that economists are likely to cause inflation next month.
“The economy is facing a growing uncertainty,” Atlanta federal president Rafael Bostic said in an essay released Thursday. “The trade policy uncertainty index by a group of Federal Reserve economists has skyrocketed beyond its historic peak.”
All dramas about tariffs have an impact on Americans’ perception of prices. A survey from Michigan found that expectations for inflation this month skyrocketed to 4.3% this month. Calling with reporters on Thursday, Bostic said, “We’re going to pay attention to everyone,” a measure of inflation expectations.
The Federal Reserve, which is responsible for managing interest rates, pays attention to consumers’ perceptions of prices, as it can give them a sense of self-fulfillment.
However, the Fed has no nightmares yet. Central bankers are particularly focused on long-term inflation expectations. This didn’t rise this month, similar to the short-term forecast for February. However, that was higher than the initially reported figure.
“In recent years, higher tariffs and immigration policies are often discussed, and are likely to raise prices, cool down total demand and ease employment. From a monetary policy perspective, the impact on inflation is likely to be the case. If you expect to be short and limited, it may be appropriate to ignore or examine price levels rises,” York. “However, if higher inflation is maintained or long-term inflation expectations rise, another financial policy response could be appropriate.”
The closely monitored consumer price index rose 3% from the previous year in January, the Labor Department said last week it was the fastest annual pace since the summer of 2024.
In an interview with Fox News’ Sean Hannity aired Tuesday, Trump said that inflation has returned, denounced the latest increase in government spending during the Biden administration. To be fair, Trump does not take much of his responsibility as he occupied his oval office for less than half of the day covered by his latest inflation report.
The latest episode of high inflation undoubtedly happened on the watch of former President Joe Biden.
“I had nothing to do with that,” Trump said. “These people run the country. They spent their money so no one had spent it.”
But inflation is now a Trump issue.
And some economists point to the role government spending played in boosting the economy after the pandemic. This is trillions of dollars for COVID relief and infrastructure projects – but that was not the only reason inflation spiked. In reality, it was a combination of factors such as the pandemic shock on supply and demand and the Russia-Ukraine war.
“The changes in the pandemic of pent-up demand, stimulating policies, work and leisure practices, and additional savings related to the spending on constrained services all contribute to the historic surge in consumer spending on products. Last year, Federal Reserve Chairman Jerome Powell said in a keynote address at the Kansas City Fed’s annual economics symposium.
“Enter inflation,” he said.
