Inflation ‘Slowing’ As Trump Takes Control Of Economy: Report
The U.S. Bureau of Economic Analysis recently released its Personal Consumption Expenditure (PCE) Index, a crucial indicator of inflation, which showed only a modest 0.3% uptick last month. This comes as President Donald Trump begins addressing economic concerns.
Because inflation naturally tends to rise over time, economists primarily analyze the rate of increase rather than its mere existence. According to The Center Square, the latest figures aligned with expert predictions.
Year over year, the index rose by 2.5%, or 2.6% when excluding volatile food and energy costs. While some experts had anticipated a more pronounced decline in inflation at this stage, these figures remain considerably lower than the surging inflation levels observed under the Biden administration.
“Nothing in these data change the narrative much. Inflation appears to be gently slowing and that could give optimists hope that it will continue to do so,” noted Jason Furman, a Harvard economics professor and former advisor to President Barack Obama, on X. “But core inflation is also stuck above 2.5% — much higher than the 2.1% that forecasters had expected just a year ago.”
In January, personal income saw a 0.9% increase, while personal spending declined and savings rates improved.
“This is the ultimate double-edged sword report: PCE came in line with expectations and is relatively good news, but Personal Spending came in much lower than expected and is cause for concern, because of the steep drop in consumption,” said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management in Charlotte, N.C., in a statement to the outlet.
“Given how sanguine investors are about the economy – assuming GDP will stay above 2% for the foreseeable future – and how concerned they are about inflation remaining sticky, we are at risk of an out-of-consensus situation, where we may be experiencing a deteriorating economy with inflation that will be less of an issue than is currently feared,” he added.
One of Trump’s primary economic promises leading up to the November election has been curbing inflation and reversing the economic downturn seen during the Biden-Harris administration. However, as Semafor points out, this will not be a simple task.
“Some Republican lawmakers and CEOs are fretting over sagging consumer sentiment as Trump’s proposed tariffs and federal layoffs stress a system taxed by persistent inflation and a slowing labor market. Stock markets are subdued, and new data shows that people in the US are feeling less optimistic about the economy, with surging expectations of higher prices and fewer jobs,” the outlet reported on Friday.
“While GOP leaders — and Trump himself — blame former President Joe Biden for rising prices, thanks to his trio of pricey government stimulus laws, there’s a time limit on that argument. Once Trump fully owns the economy, his party will have to answer for the broader economic effects of his policies,” the report further stated.
Additionally, Trump faces the challenge of managing the national debt, which is no small feat. “Inflation comes from debt, and so if you add more debt, you’ll get more inflation,” Sen. Rand Paul (R-Ky.) recently remarked.
Sen. Thom Tillis, R-N.C., who is gearing up for a difficult 2026 reelection bid, emphasized in an interview with Semafor that “the tariff regimen has to be right, or it’s going to be inflationary.” He further stressed the importance of properly handling Trump’s proposed tariffs while ensuring tax hikes are avoided, warning that failure to do so could result in “a very, very difficult cycle for us.”
Tillis remains optimistic about President Trump’s newly appointed U.S. Trade Representative, Jamieson Greer, believing he will effectively oversee tariff policies. Greer will be tested immediately, as Trump recently announced potential tariff increases on Mexico, Canada, and China, which could take effect as soon as next week.
Meanwhile, the Trump administration has instructed federal agencies to prepare for further staff reductions after already executing widespread dismissals and buyouts impacting tens of thousands of employees. At the same time, inflation and jobless claims continue to rise, according to the outlet.