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Inflation slowed down in February to 0.2 percent monthly, or a 2.8 percent annual increase, according to the latest data by the Bureau of Labor Statistics, defying predictions by President Donald Trump’s political
opponents that President’s tariff policies taking effect would immediately cause inflation to speed up.

On just March 2, Senate Minority Leader Chuck Schumer (D-N.Y.) boldly predicted, “President Trump’s tariffs are going to raise prices on
families by as much as $1,200 per year.”

On March 11, just yesterday, Schumer declared, “inflation has gone up
under Donald Trump, from groceries to retail to cars.” (See below: Both groceries and cars didn’t experience any price increases in February, the
first full month of Trump’s presidency.)

On Feb. 1, House Minority Leader Hakeem Jeffries (D-N.Y.) similarly
suggested that prices would go up, stating, “The tariffs imposed by the administration and strongly supported by House Republicans will not lower
the high cost of living for everyday Americans. Instead, it will likely do
the exact opposite and make life more expensive.”

On March 3, Sen. Elizabeth Warren (D-Mass.) also projected price hikes,
saying, “Donald Trump promised on ‘Day 1’ to lower costs, but instead
working families now have to worry about giant corporations using his
haphazard tariff announcements as an excuse to raise prices – and the
Trump Administration has no plan to stop it.”

You could go on and on. Political parties in legislatures including
Congress coordinate their talking points to provide consistent messaging
and proclamations about how they see the state of affairs, and in
opposition, usually outline worst case scenarios that the White House incumbent’s policies, in this case Trump, might lead to.

In this case, Democrats bet — wrongly, as it turned out — that inflation
would accelerate. Whoops.

Instead, inflation appears to be decelerating, from 3 percent annualized
in January to 2.8 percent in February.

Food at home—the food Americans buy at grocery stores — did not grow at
all, at 0 percent.

Gasoline decreased 1 percent.

New cars decreased 0.1 percent.

And transportation services decreased 0.8 percent.

There are still some mixed signals. For example, electricity increased
another 1 percent and piped gas utility service was up 2.5 percent. By and large, though, electricity and heating services including natural gas are domestically produced.

Still, the picture of cooling inflation is exactly what one would expect
to see towards the end of an economic cycle, particularly following a
large increase in inflation the U.S. experienced in 2021 and 2022.

Inflation hit 7.5 percent by Jan. 2022 and peaking at 9.1 percent in June
2022 as production failed to catch up after the Covid economic lockdowns
of 2020 and 2021, and the federal government printed, borrowed and spent
almost $7 trillion.

As that happened, the U.S. economy overheated, with the growth of consumer credit plunging even as labor markets reached maximum employment. But
then, as has happened in every single economic cycle in the postwar
period, as inflation slowed down, predictably, unemployment increased, up
now by 1.3 million since Jan. 2023 to more than 7 million.

All of which contributed to Democrats’ defeat in the 2024 elections as
Trump won and Republicans secured majorities in the House and Senate.

It has nothing to do with tariffs. For example, former President Joe Biden
left Trump’s tariffs on China in place throughout his presidency, and
China left its tariffs on U.S. goods in place.

During the Biden years, we saw prices start out low, then accelerate, not because of tariffs, but because of global supply chain issues and monetary
and fiscal stimulus after Covid, and then slow down as the economy
overheated. Nothing to do with the taxes levied on imported goods by
either country.

To be certain, after so much inflation, the global economy does appear to
be slowing down, too.

For example, in India, inflation in February slowed to 3.6 percent, a seven-month low and below market expectations, amid cooling there as well, which again, is irrespective of tariff rates. India charges very high
tariffs for goods shipped to their 1.45 billion population — 18 percent of
the global population — but that has neither driven the global economy up
nor down.

So, if inflation is cooling here, and it is cooling in India — and
everywhere else — in spite of minor changes to tariff policies, then the
global economy is simply slowing down after overheating for the past three years. That’s it. Maybe next time speed up production faster and don’t
print so much money for a recession.

In the meantime, domestically, undoubtedly Trump’s opponents will now
pivot from talking about higher prices to talking about a recession even
though a recession signals have been flashing red for months and years.
The partisan analyses too are normal, but it can also be noise that might
not take into account the long term factors that impact items like
inflation, unemployment and overall growth.

Instead, what we might be learning is that President Trump’s tariffs,
coming at a time when prices are cooling and the economy is perhaps
slowing, could actually represent very well-timed policy to reorient U.S.
trade policies. But we are also learning that after the inflation of the
Biden years, Trump has inherited a crappy economy that might be due for
another recession. Stay tuned.

https://amac.us/newsline/economy/inflation-cools-in-february-in-spite-of- trump-tariffs-bewildering-democrats-who-had-predicted-higher-prices/

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