The Inflation Genie Is Moving to the White House
Price and wage trends point to the Fed hitting its target this year, but whether it gets there now depends on Trump.
Which way from here?
Photographer: Christopher Dilts/Bloomberg
The latest updates on the labor market and consumer prices show President-elect Donald Trump inherits an economy where inflation is poised to return to the Federal Reserve’s target later this year. Those wondering what that means for interest rate cuts should focus not on the Fed but on the next White House’s fiscal and trade policies.
Last week’s payrolls report was a big upside surprise, but it nonetheless provided further evidence that the labor market is no longer a source of inflation. Year-over-year growth in average hourly earnings for non-managerial employees came in at 3.76%, the lowest since 2021 and essentially in line with the trend through much of 2019. That’s to be expected when white collar employment growth remains tepid and the overall hiring rate is low.