Can Trump Fix Inflation?
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Access to affordable credit helps me pay my employees, but I don't really need it. Inflation is killing me. But who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill. See? Banks and credit unions help small businesses make payroll. This bill would cut the vital resources they need. While increasing megastore profits. They deserve it, don't they? Tell Congress, stop the Durbin Marshall money grab for corporate megastores. Paid for by the Electronic Payments Coalition.
Here's your Money Briefing for Friday, December 13th. I'm J.R. Whelan for The Wall Street Journal. Inflation has trended downward for the past year, but prices are still high. Easing the pain for consumers was one of the themes of Donald Trump's 2024 presidential campaign.
His biggest answer was he was going to drill, baby, drill. That by opening up drilling, by making permitting processes and so forth easier, that energy costs would go down and that would bring down overall inflation.
Is that likely to work? We'll talk to Wall Street Journal economics reporter Justin Lehart. After the break.
Access to affordable credit helps me pay my employees that I don't really need it. The inflation is killing me. But who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill. See? Banks and credit unions help small businesses make payroll. This bill would cut the vital resources they need. While increasing megastore profits. They deserve it, don't they? Tell Congress, stop the Durbin Marshall money grab for corporate megastores. Paid for by the Electronic Payments Coalition.
What is the current state of inflation and why does it still feel high for consumers?
President Trump has promised to tackle inflation once he takes office. But how much power does he actually have? Wall Street Journal economics reporter Justin Lehart joins me. Justin, bring us up to speed. Why did inflation race up so high in 2021 and 2022? And why are prices still stubbornly high, even though overall the rate has come down?
There are a few things that went on that pushed inflation up. For sure, the pandemic and supply chain problems that it caused were huge problems. Economists also think that to some degree, the stimulus packages that went out to help boost the economy after the pandemic may have contributed to inflation. There's also a view that the Federal Reserve could have started raising rates earlier than it did. That might have tamped down inflation as well. Right now, we're at a point where inflation has cooled a lot, where it might be on a glide path back to the 2% that the Federal Reserve is targeting. As for why prices are stubbornly high, the thing about inflation is once prices go up, It's very hard for overall prices to go down.
A big part of that is people's wages adjust. Inflation goes up, and then people's wages go up, and that's a cost for businesses. There's not a good situation where prices would go down. Nobody wants to accept lower wages. That would be a deflationary environment, and deflation is just one of the worst things that can happen to an economy.
What did Trump promise on inflation during his 2024 campaign and how did he describe 'drill, baby, drill'?
It drives up credit, it drives up financial markets, sort of a Great Depression situation in the worst case.
What specifically did former President Donald Trump say during the most recent campaign that he would do regarding inflation?
His biggest answer was he was going to drill, baby, drill. That by opening up drilling, by making permitting processes and so forth easier, that energy costs would go down and that would bring down overall inflation.
Why have we heard so much skepticism from critics about that?
When it comes to drilling, making it easier for oil and gas companies to drill, that doesn't mean they're going to up production. So US production is already quite high. So it's not clear that would raise production a lot. But in any case, oil prices are coming down. Gasoline is floating around three bucks now, getting to under three. So that's already happened. It may have nothing to do with expectations of more drilling, But it is disinflationary.
Trump has also talked about tariffs during the campaign.
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