The October Consumer Price Index (CPI) just released, showing a 0.2% increase month over month and 2.6% year over year. More concerning is the “core” inflation—excluding food and energy—up 0.3% for the month and 3.3% over the year. These numbers are a red flag, signaling inflation is sticking around longer than the Fed might like.
Yet, Wall Street Investors seem oddly confident, perhaps believing inflation isn’t hot enough to shift the Federal Reserve’s course. But they may be in for a surprise. Reportedly, traders are giving 80% odds on a December rate cut—up sharply from yesterday’s 50-50 chance.
If the Fed doesn’t clamp down soon, the inflation fire could spread, making it a bigger headache for Trump. It’s a problem that won’t get easier with time, and the longer it’s ignored, the harder it will be to fix.
Inflation moves up fast and quickly when large sums of controlled spending tend to linger longer, but fixing it can be slow and involve many variables. We have already started with the toughest ones – a change in leadership with hope and confidence in the future; and the stock market wizards are putting their sideline money back in the market (of course, this latter one could simply be the presidential cycle rally from the election through early 2025).
Hopefully, inflation will stabilize, which is the first goal. However, considering how many times the Biden Administration has had to “correct” for worse economic numbers, the Trump Administration will need correct numbers to manage the progress of the adjustments.