An encouraging inflation report won’t satisfy anybody

The inflation rate is almost back to normal, but President Trump has done almost nothing to bring costs down.

Key takeaways: 😉

• The inflation rate dropped to 2.4% in January. That’s pretty good.

• But many Americans are still struggling with elevated prices of the last five years.

• Trump said the latest inflation numbers show “more winning.”

• But consumer sentiment is terrible.

• And Trump now gets very low marks from voters for handling inflation.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

The rate of inflation is falling and getting close to normal levels. But hardly anybody is navigating grocery aisles praising all the bargains.

The annual rate of inflation fell from 2.7% in December to 2.4% in January. The improvement was a bit better than economists expected. The Federal Reserve prefers inflation to be around 2%, so it’s getting close to the target range.

But consumers are frustrated with elevated prices, and a modest improvement in the data won’t change anybody’s mind. Shoppers are still grappling with prices that have risen sharply during the last five years. Very few things have dropped in price.

The Pinpoint Press monitors inflation each month in 27 categories that cover most things people spend their money on. There are usually a couple of standout items with eye-popping price hikes. For the last year that has included coffee, up 18.3% year-over-year, and ground beef, up 17.2%.

Overall grocery inflation is relatively tame, at 2.1%. But grocery prices have jumped 27% during the last five years, and it’s the cumulative rise in prices that many families feel. Average earnings have grown just 24% during the same time period, so the typical dollar buys a little less food.

The same unhappy math applies to other key categories. Rent inflation is a tolerable 2.8% during the last year—but 28% during the last five years. Transportation costs declined 1.1% during the last year—but they’re still up 30% during the last five.

Drivers are getting a break on gasoline prices, which are down 7.5% to a national average of $2.94 per gallon. But they’re giving it all back, and then some, on household energy costs, aka heat and electricity. Those are up 6.6% year-over-year—and 41% during the last five years. Gasoline prices get more attention, but the typical family spends more on utilities. Those price hikes hurt.

Trump has been crowing about the economy, including the Dow Jones stock index crossing 50,000 for the first time recently and a January jobs report that exceeded expectations. On February 13 he said the latest inflation report amounted to “more winning.”

Most Americans aren’t feeling it. Surveys by the Conference Board, the University of Michigan and others show consumer confidence at recessionary levels. Americans have two major gripes on the economy: Elevated prices and a sharply slowing job market. Rising stock values help some, but financial wealth is heavily concentrated among the top 10% of Americans. Plus the Dow has fallen back below 50,000.

Trump’s approval ratings have fallen into the low 40% range, and his marks for handling the economy are even worse. Polls by YouGov show that Trump has lost more ground with voters on inflation than on any other issue. Winning, that is not.