CNN: There’s Really Not Much Inflation So Far

I’m a bit surprised to see this at CNN of all places. CNN is so reliably anti-Trump that it’s a surprise to see anything that undermines the narrative. And yet, here’s a straight news article from the business section noting that the doomy predictions of the experts haven’t come true so far.

Predictions from mainstream economists were dire after President Donald Trump launched his tariff campaign just a couple weeks after he began his second term in office: Prices would rise — sharply — they said, reigniting an inflation crisis that tens of millions of Americans had elected him to solve.

But that massive, tariff-induced inflation spike hasn’t materialized. Not even close.

Not yet, anyway.

Consumer prices rose just 2.4%, annually, last month, according to the Bureau of Labor Statistics. That was less than economists had expected, and only slightly higher than the 2.3% rate in April, which was the US economy’s lowest inflation since February 2021. According to the Personal Consumption Expenditures price index most closely followed by the Federal Reserve, core inflation — which strips out volatile items like food and gas prices — fell to 2.5% in April. That was the lowest reading since March 2021.

The news has been good enough that some figures in the Trump administration are celebrating it as a win.

“They’ve all been discredited,” said the White House’s top trade adviser, Peter Navarro, in an interview last month with CNN, referring to tariffs’ detractors. “What we got in the first term [of Trump’s presidency] was not recession or inflation, we got price stability, robust economic growth and rising wages, just as we thought we would.”…

“Tariffs have just not shown up at all in any of the data,” [Joseph] Lavorgna, counselor to the Treasury secretary, told CNN this week. “The forecasting community has been completely wrong.”

And yet, Fed Chair Jerome Powell said yesterday that he is still expecting significant inflation later this year and for that reason interest rates will not change.

The Fed on Wednesday held its benchmark interest steady, matching Wall Street’s expectations. The Fed in a statement said uncertainty has “diminished” but “remains elevated.”

Stocks initially held on to their gains after the decision was announced before dropping lower during Powell’s afternoon press conference.

Investors digested Powell’s remarks that while uncertainty has peaked, it is still tremendously difficult to forecast the inflationary impact of tariffs…

“Powell said without tariffs, confidence would be building that inflation is coming down given the recent data,” St. Aubin said. “This was an implicit admission that tariff uncertainty is paralyzing monetary policy.”

President Trump was clearly exasperated by this news, calling Powell a disgrace.

Despite Trump’s irritation, many economists still say increased inflation is a “when, not if” question.

Many mainstream economists argue that the low inflation of the spring represents a calm before the summer storm, when they expect prices to rise.

“It’s a question of when, not if,” Stephanie Roth, chief economist at Wolfe Research, told CNN…

“While larger retailers may have the scale, capital and pricing power to absorb or strategically offset these pressures, small and mid-sized players remain significantly more vulnerable, with limited flexibility to manage rising input costs or supply disruptions,” Telsey said in TAG’s latest Product Pricing Analysis report.

Telsey noted that prices, when they eventually start to rise, won’t all gain equally or across the board. Only select goods will start to gain in price to start, likely beginning in late August or September.

So there you have it. We haven’t seen broad inflation yet, contrary to some predictions, but there’s still a consensus that it’s coming in 2 to 3 months. And because of that, the Fed is sticking with no change on rates. Here’s a WSJ video showing a bit of Jerome Powell’s statement yesterday followed by Trump’s reaction.