Federal Reserve’s Preferred Inflation Gauge Hits Highest Level in Three Years

Donald Trump says he isn’t worried about the midterms or the financial situation of struggling Americans, and he has the inflation numbers to prove that, in this case, he is telling the truth.

The Commerce Department announced on Thursday that the Personal Consumption Expenditures Index, which the Federal Reserve uses to measure inflation, was 3.8 percent in April compared to the previous year.

While that is bad enough, prices were up 0.4 percent in April alone. At that rate, inflation could soon top 4 percent and, if the twin crises Trump has created — the war in Iran and his tariffs — continue and keep making everything more expensive, even approach 5 percent.

And it is not just energy costs, which have been especially affected by the conflict and the accompanying closure of the Strait of Hormuz, and food prices that went up. “Core” inflation, which leaves out these two more volatile variables, increased by 0.2 percent in April and reached 3.3 percent year-over-year, which is also well above the Fed’s target of an annual rate of inflation of 2 percent.

In short, this is terrible news for a president who claimed that he would bring down prices on “day one,” and a Republican Party that is in full control of all three branches of the government.

While the reality-averse Trump may shrug all of this off as “fake news,” and his historically bad approval ratings as “fake polls,” the GOP does not have that luxury.

With the midterms looming in a little over five months, Republicans are going to pay the price of the president’s economy. And this is something they cannot lie their way out of or blame Joe Biden for.

Americans are feeling the effects of Trump’s policies and know who is at fault.

Only 13 percent of them believe that the economy is getting better. It is a figure that would be much lower if it weren’t for 44 percent of MAGA supporters who claimed that everything is going great. For example, a mere 6 percent of independents think that the economy is improving while 72 percent said it is getting worse.

High inflation is not just a major problem for consumers and the GOP but also for Kevin Warsh, who was sworn in as chairman of the Federal Reserve last week.

Trump has made it very clear that he wants the Fed to cut interest rates. However, that usually only happens when inflation is in check, not when it runs rampant. Therefore, it is more likely that the Fed will increase rates in response to these numbers than decrease them.

Finally, to make matters worse for the GOP, the Commerce Department on Thursday also made a downward revision to the economic expansion in the first quarter. After initially saying that the gross domestic product had grown 2 percent during that time, which already wasn’t great, that figure was updated to 1.6 percent.