Study: Inflation Higher In Democrat-Run States
A new analysis from the White House Council of Economic Advisers is bolstering the Trump administration’s argument that conservative governance delivers real economic relief, finding that inflation has been markedly lower in Republican-led states than in states controlled by liberal governments over the past year.
Reviewed by FOX Business, the analysis examined year-over-year Consumer Price Index data from the Bureau of Labor Statistics through November 2025. The findings show that inflation averaged 2.5% in states led by conservative governors, compared with 3% in states governed by liberals.
Because the Bureau of Labor Statistics does not publish official state-level CPI figures, the Council of Economic Advisers relied on regional inflation data and adjusted the figures based on state population to estimate statewide trends.
The divide became even more pronounced at the metropolitan level.
Metro areas in conservative-led states recorded just 1.9% year-over-year inflation, while metro areas in liberal-led states posted a much higher 3%. According to the analysis, the gap was most visible in everyday household expenses such as commuting, utilities, and energy bills.
Energy costs emerged as a primary driver of the disparity. In major liberal-run metro areas — including Baltimore, Chicago, Los Angeles, and New York — energy prices rose more rapidly than in cities located in conservative-led states. Combined energy and transportation costs accounted for a significant portion of the inflation gap between the two groups of metro areas.
These categories tend to hit households quickly, as rising electricity, gasoline, and commuting costs are felt immediately, even when broader inflation measures appear modest.
Housing inflation remained elevated nationwide, though the data showed prices continuing to rise slightly faster in liberal-led states than in conservative-led states, further compounding affordability challenges in Democrat-run regions.
White House economic director Kevin Hassett said Sunday that addressing housing costs is a top priority for President Donald Trump’s administration.
“Everybody in the whole Cabinet is working on trying to get housing to be more affordable,” Hassett told Fox News Sunday.
He added that a comprehensive proposal aimed at easing pressure on homebuyers is currently being finalized, with more details expected early in the new year.
Earlier this month, President Trump and senior White House officials highlighted inflation coming in at 2.7 percent for November — lower than economists had projected. Administration officials have argued the numbers point to a strong economic acceleration heading into 2026.
Paul Ashworth, Oxford Economics’ chief North America economist, said he was surprised by the data, particularly the modest increase in housing costs.
“It’s possible that this does reflect a genuine drop off in inflationary pressures, but such a sudden stop, particularly in the more-persistent services components like rent of shelter is very unusual, at least outside of a recession,” Ashworth wrote in a note.
Treasury Secretary Scott Bessent echoed that optimism, predicting strong growth ahead.
“I think 2026 will be a great year for growth, inflation, and the American people,” Bessent said.
During an interview with Fox News host Laura Ingraham, Bessent contrasted the current trajectory with what he described as the economic damage left behind by the Biden administration.
“I think 2026 will be a great year for growth, inflation and the American people that the president work for everyday. It is because the affordability crisis under the Biden Administration, there are two parts here. There is price level and then there is the inflation rate. And the price level just got out of control during the disastrous four years of Biden,” Bessent said.
“So stated consumer price index was up about 21-22 percent, the Wall Street firm has something to call the common man index which is what do working-class families by. Groceries, rent, insurance, used cars. That was up about 35%. So that big price level. Then there is the rate of change and as we saw this week, President Trump, the whole administration had been working hard to bring down the inflation level on a trailing three-month basis, inflation is now 2.2%,” he added.
Bessent also pointed to changes in the labor market under President Trump.
“In general, we have seen the growth of jobs this year have gone to native-born Americans. Not illegals, not others,” he said.
Taken together, the data reinforce a growing contrast between conservative and liberal governance — one that the Trump administration argues is increasingly reflected in Americans’ monthly bills, job prospects, and overall economic confidence.