How to Gauge the Strength of Trump’s Fact-Free Economy

Don’t tell Trump, but the underlying data of the CPI report is less reassuring than the topline figure. When you strip out groceries and gas, the prices of which are highly volatile, “core” inflation rose to 3.1 percent over the previous year, up from 2.9 percent in June. That’s the highest core CPI number since February. But this rise was only partly due to Trump’s tariffs. Mostly it was driven by price increases for services like plane tickets, health care, and auto repair. Tariffs apply only to goods; in services, the United States has a $26 billion trade surplus, which explains why Trump never thinks about them. Still, inflation is inflation, no matter the cause.

Trump’s nominee to run BLS is a hack named E.J. Antoni. Antoni is chief economist at the Heritage Foundation, and even Stan Vueger, a senior fellow at the conservative American Enterprise Institute, says he’s “utterly unqualified and as partisan as it gets.” Trump tweeted Monday that Antoni’s jobs numbers will be “HONEST and ACCURATE,” but Antoni’s apparent strategy is to make jobs numbers less FREQUENT. Earlier this month, Antoni recommended that the monthly jobs report be eliminated and replaced by quarterly reports. That might make sense if the Federal Reserve adjusted the cost of borrowing on a quarterly basis, but it doesn’t (and it can’t if monetary policy is to be made in timely fashion). The Fed sets interest rates eight times per year, and it couldn’t fulfill its statutory “dual mandate” of addressing both inflation and unemployment if it failed to receive information about unemployment at least eight times a year. Perhaps realizing this, or more likely just noticing the statement was generating bad press, Antoni’s Heritage colleague Stephen Moore said late Tuesday that Antoni has now dropped the idea.

I continue to believe that Trump will fire Fed Chair Jerome Powell before his term ends next May, but he won’t likely fire him soon. That’s because the new inflation report is low enough to justify the drop in interest rates for which Trump has been screaming. The jobs report that cost McEntarfer her job, which showed a puny 73,000 jobs created in July, doesn’t merely justify a Fed reduction in interest rates; it demands it. So, the Fed will likely lower interest rates when it meets in mid-September. McEntarfer died that Powell might live a little while longer.