Weekly Economic Update 06-12-26: Small Business Optimism; Existing Home Sales; Consumer Price Index; Producer Price Index

If the President "loves the inflation" then he must be a happy man about now.

The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents. 

“No, I love it. The numbers were great.
You know what I really love? I love the inflation!”

I know this will come as a shock to many of you, but on occasion, politicians say stupid things.

To be fair, they are constantly hounded by a hostile and generally dishonorable media that constantly bombards them with questions, just hoping that they will slip up. This is why, despite regular requests, I completely stopped talking to the media many years ago.

This is especially true at the national level. Combine that with the fact that our current President uses hyperbole the way the rest of us use oxygen, and the “gotcha” quotes appear to be a daily occurrence. For the better part of the last ten years, the extent to which the media has taken the President’s hyperbolic rhetoric seriously has been laughable, and the only damage they have done is to their own reputations as they demonstrate that they are not serious people.

That said, this week’s quote that the President “loves the inflation” ranks as possibly one of the most stupid, tone-deaf statements ever uttered in the Oval Office. And that is saying something.

Yes, I get that he was once again trying to make the point that 1) the price increases are only due to the price of oil, and 2) that when the conflict with Iran is over, prices will come down. Unfortunately, he is completely wrong on both points.

Trump blaming his actions in Iran for inflation is just like Biden blaming the Russian invasion of Ukraine. Both ignore the fact that their governments are printing money at an historic pace, and we would have inflation without these external activities.

The President is further incorrect that prices will come all the way back when the conflict is over. They won’t. Oil infrastructure has been badly damaged, and global output will still be hampered long after the fighting stops.

But neither of those two things is why the comment was stupid. It was stupid because people are hurting. I mean, they are really hurting. Inflation is up, and it doesn’t matter if it is because they are printing money or fighting a war in the Middle East — that distinction is lost on anyone who buys groceries. The level is the problem. Since 2020, a typical basket is up north of 20%, and none of that is coming back down — disinflation just means the pain accumulates more gently from an already-painful base.

Meanwhile, wages aren’t keeping up. Adjusted for inflation, real hourly compensation has been flat-to-negative, which means every nominal raise is getting eaten before it ever hits the bank. So how are people keeping up? The same way they have for two years now — draining savings and leaning on credit cards at 21%. Add gas well north of $4 a gallon, and you have a household sector not just running in place…they are losing ground. A lot of ground.

So I don’t really care what point the President was trying to make. Tens of millions of households are watching their paychecks shrink in real terms and draining savings they can’t replace — and the man at the top loves it. Whether that’s more hyperbole or simple contempt for the people footing the bill, the result is the same. Inflation isn’t something you love. It’s a tax on everyone who isn’t rich enough to ignore it.