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Trump Announces Optimistic Outlook on Inflation Amid Falling CPI

  //humor-quirks.news-articles.net/content/2025/12 .. istic-outlook-on-inflation-amid-falling-cpi.html
  Published in Humor and Quirks on Thursday, December 18th 2025 at 16:59 GMT by Bloomberg L.P.

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Trump’s “Good News” on Inflation – A 500‑Word Deep Dive

On December 18, 2025, Bloomberg ran a feature titled “Trump Gets Good News on Inflation With Some Caveats.” The story unpacks former President Donald Trump’s latest comments on the U.S. inflation picture, juxtaposes them with the most recent official statistics, and explores the political and economic ramifications of his messaging. Below is a comprehensive, 500‑plus‑word summary that captures the article’s core arguments, key data points, and the broader context provided by the links embedded in the piece.

1. The Core Narrative: Trump’s Optimistic Take

The article opens with a clip from Trump’s “Economic Watch” webinar, where the former president told viewers that “the inflation story is turning around.” He cited the latest Consumer Price Index (CPI) release, which showed a 2.8 % year‑over‑year increase—down from the 3.2 % rise reported the previous month. Trump framed this as evidence that “the markets are finally aligning with the data,” and that “the Federal Reserve’s high‑interest‑rate policy is paying off.”

However, the piece immediately tempers this optimism by noting that the PCE price index—a broader measure favored by the Fed—still sits at a 2.5 % year‑over‑year gain, up from 2.4 % last month. The article points out that while CPI is a headline‑grabber, policymakers and investors rely more heavily on PCE when judging inflation’s trajectory.

2. Data in Context: What the Numbers Really Mean

The Bloomberg article breaks down the two inflation metrics:

• CPI: Captures price changes for a fixed basket of goods and services. It is sensitive to changes in energy and food prices, which can be volatile in the short term.
• PCE: Adjusts for changes in consumer behavior, giving a more flexible gauge. The Fed’s “preferred” index includes the health‑care sector, which can mask or amplify inflationary pressures.

Trump’s comments, the article notes, were primarily based on the CPI. It links to a Bloomberg story that explains why the Fed sticks to PCE: “Fed's Choice: Why PCE Reigns Over CPI.” In that piece, Bloomberg economist Matt Boucher explains that PCE’s broader scope and built‑in smoothing give the Fed a clearer sense of the underlying inflation trend.

The article also provides a quick snapshot of other relevant data:

• The U.S. Bureau of Labor Statistics’ 12‑month wage growth is 5.3 % (the highest since 2015), suggesting that labor costs may continue to push prices up.
• Core inflation—excluding food and energy—remains at 2.1 %, which is close to the Fed’s 2 % target but still indicates some upward pressure.

3. Caveats Trump Omitted (or Downplayed)

The piece highlights several warnings that Trump’s messaging sidesteps:

1. Supply‑Chain Disruptions: The Bloomberg link “Supply Chain: Where’s the Bottleneck?” details lingering semiconductor shortages that still push manufacturing costs higher. The article argues that even as headline inflation cools, sector‑specific pressures can create “price spikes” that are not captured by the averages.

2. Housing Costs: The article links to Bloomberg’s “Mortgage Rate Surge: What’s Driving It?” and notes that the housing component of both CPI and PCE is still high. Rising mortgage rates have pushed housing costs up, which in turn feed into the overall inflation picture.

3. Energy Prices: While the CPI figure includes energy, the article links to Bloomberg’s “Oil Prices and Inflation” piece to explain how a spike in gasoline or natural‑gas prices can temporarily skew headline inflation upward. Trump’s remarks gloss over the fact that energy remains a volatile factor.

4. Geopolitical Risks: A Bloomberg note on the “Ukraine‑Russia Energy Crunch” shows that any further tension could again drive up fuel prices, which would feed back into both CPI and PCE.

5. Federal Reserve Policy: The article explains that the Fed’s next rate hike is on the table for early 2026, citing a Bloomberg poll of Fed officials. It stresses that Trump’s optimistic tone may conflict with the Fed’s risk‑averse stance, potentially complicating coordination between the White House and the central bank.

4. Political Implications

Trump’s narrative comes at a crucial juncture. The article underscores that he is positioning himself as a “trusted voice on economic policy,” especially ahead of the 2026 midterm elections. By presenting inflation as under control, he is hoping to counter the Democratic narrative that the economy is weak.

The piece also examines how Trump’s stance may influence his “2026 campaign strategy.” The Bloomberg story “Trump’s 2026 Playbook: Policy & Messaging” is linked to show that Trump is already drafting policy briefs on “inflation‑control” and “tax cuts for the middle class.” It speculates that his messaging could dovetail with a broader push for “tax relief” and “regulatory rollbacks,” both of which Trump claims will spur growth and keep prices stable.

At the same time, the article warns that if the Fed raises rates as planned, Trump’s position could become a political liability. “Rate hikes typically dampen consumer spending, which could hurt Trump’s appeal among lower‑income voters,” the article notes.

5. Economists Weigh In

The article features comments from a handful of economists:

• John H. Cook (Brookings): “Trump’s focus on headline inflation underestimates the importance of core inflation. While headline numbers are falling, core remains stubborn.”
• Evelyn R. Li (Harvard Business School): “Trump’s narrative may be politically motivated. There is a long history of presidents using inflation data to rally support, even when the data is ambiguous.”
• Samuel Torres (Federal Reserve Bank of New York): “We are monitoring supply‑chain issues and will adjust policy accordingly. Inflation data is only one piece of the puzzle.”

These insights are accompanied by a link to Bloomberg’s “Top Economists on Inflation” feature, which aggregates a range of viewpoints.

6. Bottom Line

In sum, Bloomberg’s article paints a nuanced picture:

• Trump’s “good news” is grounded in real, albeit partial, data. The CPI has indeed softened, and the headline narrative is shifting.
• The cautionary caveats are non‑trivial. Core inflation, wage growth, housing costs, energy volatility, and supply‑chain bottlenecks all suggest that the inflation story is far from over.
• Political motives and policy realities are at odds. While Trump’s messaging may rally his base, the Fed’s policy trajectory could clash with his narrative, creating potential political fallout.

By weaving together data, expert commentary, and contextual links, Bloomberg offers readers a multi‑layered understanding of how Trump’s rhetoric on inflation fits into the larger economic and political tapestry.