Checking In on Inflation

The numbers: The U.S. inflation rate in October was 2.6%, down from 9.06% in June 2022. (Kevin Drum)

• As the liberal journalist Kevin Drum has noted, wage growth has outpaced inflation in cost of goods but not in the price of services.

Context: While the peak of inflation appears to have passed, Americans are counting on Donald Trump to tackle lingering financial challenges.

Bubba’s Two Cents

So this isn’t at all to discount the people who are still struggling, but consumer sentiment has ticked up (even before Trump’s election win) in recent months. When it comes to high prices, Trump is inheriting a much better situation than he would have two years ago — which is a great thing. On the other hand, it’s not all sunshine for the incoming administration. As a new Morning Consult analysis of the state economy put it:

“Workers have diminished bargaining power in the labor market with fewer job openings and slower wage growth. Real income growth has fallen near spending growth as consumers struggle to save, particularly low- and middle-income consumers. Dwindling savings and higher interest rates are leading to more delinquency in credit card debt. Weaker household finances and fatigue with higher costs are causing consumers to employ more cost saving measures like forgoing pricey purchases or trading down to cheaper alternatives despite lower inflation.”