Trump's Inflation Disconnect: The Widening Gap in Economic Perceptions

The Perception Gap: Trump and Inflation in the American Economy

In recent weeks, a peculiar split screen has emerged in the United States: while the public has increasingly voiced concerns that inflation is their primary economic worry regarding the Trump administration, the President insists that inflation is a thing of the past.

Polling Data: Rising Inflation Concerns

A new Yahoo News/YouGov poll revealed that President Trump received a low 28% approval rating when it comes to handling the cost of living. This result aligns with other recent polls indicating growing public anxiety about rising prices. In contrast, Trump stated in a radio interview with WABC, "We don't have inflation. Almost everything is going down in price."

Economic Data vs. Political Rhetoric

Trump's messaging clashes with both public sentiment and economic data, as prices have consistently remained above the Federal Reserve's 2% inflation target. However, Trump and other inflation watchers received an encouraging signal on Wednesday, as data showed a surprise 0.1% month-over-month drop in the Producer Price Index (PPI) for August, although the year-over-year growth was 2.6%. Trump hailed this figure as a victory, declaring, "(Data) just came out: NO INFLATION!!!" and again urged Federal Reserve Chair Jerome Powell to lower interest rates.

Inflation's Impact on Trump's Approval

Inflation has become a key issue contributing to the decline in President Trump's approval ratings since he took office. An Economist Trump approval tracker revealed that Trump's support on inflation and price issues was slightly higher than his disapproval at the start of his term. But since then, the decline in that support has been more dramatic than for any other issue. This tension is likely to intensify on Thursday, as the August Consumer Price Index (CPI), another closely watched inflation gauge, is released.

Inflation: A White House Economic Weakness

The polls reveal a fundamental problem for the White House, which is that inflation represents President Trump's most evident economic weakness. A RealClearPolitics tracker of Trump's job approval on inflation shows that his current average approval rating is 38.8%, 20 percentage points lower than the 59.9% disapproval rating. The rest expressed no opinion on the matter. This figure is significantly lower than Trump's overall approval rating of 45.2%, and even lower than his economic approval rating of 41.7%. The only issue on which Trump scores lower across all the issues tracked by RealClearPolitics is Russia/Ukraine. A CBS News poll released this week found that 36% of respondents approve of Trump's handling of inflation, far lower than his ratings on the economy and immigration. In that poll, only 20% of American adults believe Trump's policies will make them better off, while 65% said his policies will increase their grocery bills. Of course, the opposition is primarily centered on tariffs, with 62% of respondents in the CBS poll opposing new tariffs on goods, and two-fifths reporting that they have reduced shopping due to tariffs. Another version of this story was told by a new Reuters poll released this week, showing that just 30% of respondents support Trump's handling of the cost of living for U.S. families.

Trump's Escalating Calls for Rate Cuts

Meanwhile, Trump has escalated his calls for the Federal Reserve to cut interest rates to the point that he has begun to downplay the importance of the 2% inflation target. Recent social media posts show Trump quoting approvingly a Fox Business Network guest, Jay Hatfield, CEO of Infrastructure Capital Management, whose messaging included that Fed Chair Powell has done “a terrible job” since adopting the 2% inflation target and that the standard is “too low, too rigid.”

Understanding Inflation's Nuances

It's important to note that inflation isn't simply about prices going up. It's about the *rate* at which prices increase. A healthy level of inflation can indicate a growing economy, while runaway inflation can erode purchasing power. The Fed aims for a target of 2% to strike a balance. Factors that contribute to inflation can include supply chain disruptions (as seen during the pandemic), increased demand for goods and services, and government spending policies. Understanding these drivers is crucial for informed economic analysis.