Trump might ‘love the inflation,’ but consumers feel the pain: Experts
“You know what I really love? I love inflation,” President Donald Trump said Wednesday after the consumer price index rose above 4% for the first time in three years due to the Iran war’s spike in energy prices. he said.
“The numbers were great,” Trump said, speaking to reporters in the Oval Office. CPI Data announced by Bureau of Labor Statistics.
U.S. households are less enthusiastic about the impact of conflict in the Middle East on the cost of everyday goods. The Federal Reserve Bank of New York’s monthly Survey of Consumer Expectations showed that the proportion of respondents who view their current situation as “much worse” than a year ago has reached its highest level in almost four years.
The oil shock put upward pressure on prices at a time when many consumers were already struggling.
US Congress Joint Economic Committee — Minority estimates tariffs and war with Iran cost every household more than $3,100 From 2025 to May 2026.
Asked for comment, a White House spokesperson sent a link to CNBC. New York Post storyTrump said he liked the fact that inflation wasn’t higher. “The numbers are much lower than expected,” he told the New York Post on Wednesday.
Experts say rising prices for basic necessities like food and gasoline are limiting how far workers can stretch their paychecks.
“Real earnings growth is negative for most American households; it’s hard to spin that in any positive direction,” said certified financial planner Stephen Kates, a financial analyst at Bankrate. “Most of the earnings gains have been wiped out by this increase in inflation.”
Average hourly earnings increased 3.4% compared to the previous year. Bureau of Labor StatisticsWage growth now lags behind inflation.
An annual inflation rate of 4.2 percent “means you’re devaluing the assets and incomes of U.S. residents — that’s a big problem,” said Wayne Winegarden, an economist at the Pacific Research Institute, a conservative think tank. “Minimizing that impact is troubling.”
Americans’ personal savings rate also recently hit its lowest level since 2022 as inflation outpaces paychecks. Data from the Bureau of Economic Analysis.
Long-term inflation expectations
Trump said this once again this week: It was stated that an agreement could be reached with Iran in the coming days and the critical Strait of Hormuz would be reopened “immediately” from now on.
Trump said Wednesday that inflation “will drop like a rock” once the war is over, even as tensions in the Middle East escalate. “When it’s over, you’ll see the oil fall back to where it was before,” he said.
The comments came after Trump said the US would hit Iran “very hard” again.
The president has made many similar comments in recent months about the imminence of a peace agreement. The war surpassed the 100-day mark on Sunday.
But even if the United States and Iran negotiate a peace deal, experts say it could take weeks or months for the inflationary effects of the war to subside.
“The speed at which the strait reopens will be crucial to future cost pressures and the resulting transmission to consumers,” BlackRock fixed income chief Rick Rieder said on Wednesday, referring to the key waterway used to transport about one-fifth of the world’s oil. he said.
Gas prices, which have been a particular pain point since the start of the Iran war, may not fall as quickly, according to Bankrate’s Kates.
“You’re still seeing a tremendous increase year over year,” Kates said. As of Thursday, consumers paid a national average of $4.13 per gallon. AAA — up from about $3.12 a year ago.
“What people care about is the price level, and even if we don’t have inflation in the next few years, price levels won’t be back by 2025, which is impossible,” Kates said. he said.
Some Federal Reserve policymakers have also expressed concern that this could raise long-term inflation expectations as the conflict continues.
