"Inflation is defeated"—but is that the full story?
President Trump recently declared victory over inflation at the UN General Assembly, claiming grocery and mortgage prices have dropped. Even Federal Reserve Chair Jerome Powell, just before cutting interest rates in August, suggested inflation risks were fading. But here’s the catch: inflation remains stubbornly above the Fed’s 2% target, and many Americans still feel the pinch of higher prices. So why the disconnect between official optimism and everyday financial strain?
The Fed’s High-Stakes Gamble
The Federal Reserve’s decision to cut rates hinges on a risky assumption: that Trump’s tariffs will only cause a temporary inflation spike. If they’re wrong, the Fed’s credibility—its most powerful tool to control inflation—could crumble. When people trust the Fed to keep prices stable, they don’t panic-demand higher wages, which can trigger a vicious cycle of price hikes. But with tariffs driving up costs for furniture, appliances, and even toys, that trust is being tested.
And this is the part most people miss: Inflation isn’t just about tariffs. Climate change and supply chain disruptions have sent coffee prices soaring 21% in a year. Grocery costs rose 2.7% in August—the steepest non-pandemic increase since 2015. Meanwhile, companies like Campbell’s Soup and National Tree Company are passing tariff costs to consumers, with holiday decor prices jumping 10%.
The Controversy: Is the Fed Underestimating the Threat?
Some economists, like Harvard’s Jason Furman, warn that 3% inflation—now dismissed as ‘manageable’—would’ve been considered unacceptably high a decade ago. Others, like Fed Governor Stephen Miran (a Trump appointee), argue slowing rent prices and reduced immigration will ease inflation naturally. But here’s the debate: Should the Fed prioritize fighting inflation or unemployment? Minutes from their September meeting reveal officials fear job losses more than price surges—a stance that could backfire if inflation reignites.
The Wild Card: Tariffs Aren’t Done Yet
Trump just slapped 100% tariffs on pharmaceuticals and 25% on trucks, with threats of more against China. While the White House insists these are temporary tools, businesses warn of lasting price hikes. National Tree Company’s CEO admits they can’t absorb all tariff costs, forcing consumers to pay more. And with factory slowdowns in China, holiday decorations may be pricier and harder to find.
The Big Question:
Is the Fed cutting rates too soon, risking a loss of public trust? Or is inflation truly ‘defeated,’ as Trump claims? Share your take below—do you feel prices easing, or is your wallet still under siege?
