This morning’s official U.S. report on the Federal Reserve’s favored measure of inflation was about the most confusing I’ve ever …Continue reading →
This morning’s official U.S. report on the Federal Reserve’s favored measure of inflation was about the most confusing I’ve ever seen – which is saying a lot given all the economy’s ups and downs lately, not to mention President Trump’s policy gyrations.
Chiefly, there was evidence in the April data that Iran War-spurred oil price increases were moderating, and evidence that they had worsened. And there were signs that tariffs were pushing prices up and signs that these increases were negligible.
At this point, all I can do is present the main, relevant numbers for the “Price Indexes for Personal Consumption Expenditures” (PCE), and how they’ve changed on monthly and annual bases.
After heating up from a 0.4 percent sequential rise in February (just before the war began) to one of 0.7 percent in March – the worst such result since peak Bidenflation in June, 2022 – headline PCE prices cooled back down to 0.4 percent in April. Here are the monthly figures for the Trump 2.0 administration (starting with his first full month back in office – February, 2025):
February, 2025 0.4 percent
March 0.0 percent
April 0.2 percent
May 0.2 percent
June 0.3 percent
July 0.2 percent
August 0.3 percent
September 0.3 percent
October 0.2 percent
November 0.2 percent
December 0.3 percent
January, 2026 0.3 percent
February 0.4 percent
March 0.7 percent
April 0.4 percent
But look at the annual figures, and the picture has worsened. Year-on-year, headline PCE acceleration for the second straight month in April, to a 3.8 percent pace. That’s the hottest such annual number since May, 2023’s four percent. Here are those results dating from the start o Trump 2.0:
February, 2025 2.7 percent
March 2.3 percent
April 2.2 percent
May 2.4 percent
June 2.6 percent
July 2.6 percent
August 2.7 percent
September 2.8 percent
October 2.7 percent
November 2.8 percent
December 2.9 percent
January, 2026 2.8 percent
February 2.8 percent
March 3.5 percent
April 3.8 percent worst since May, 2023’s 4.0 percent
In addition, these headline numbers once more showed that the final months of the Biden presidency saw a better anti-inflation performance than the first months of the second Trump administration.
During the first fourteen months of Trump 2.0, headline PCE has worsened by a total of 3.96 percent. During the last fourteen months of the Biden administration, it climbed by just 3.23 percent. Moreover, since the March PCE release showed the Biden edge over the Trump record was 3.09 percent to 3.51 percent, that Biden edge widened.
The core PCE figures strip out energy (and food) prices supposedly because they’re volatile for reasons (like wars) unrelated to the economy’s fundamental inflation prone-ness. And on a monthly basis, they eased in April for the second straight month. In fact, their 0.2 percent increase was the smallest since November’s identical figure. Here are the monthly core PCE data for Trump 2.0:
February 0.5 percent
March 0.1 percent
April 0.2 percent
May 0.2 percent
June 0.3 percent
July 0.2 percent
August 0.2 percent
September 0.2 percent
October 0.2 percent
November 0.2 percent
December 0.4 percent
January, 2026 0.4 percent
February 0.4 percent
March 0.3 percent
April 0.2 percent
On an annual basis, though, the results were pretty much the reverse. In April, core PCE rose for the second straight month, and the 3.3 percent increase was the fastest since tinflation did rise from three percent in February to 3.2 percent in March – the biggest such increase since October, 2023’s 3.5 percent. The Trump 2.0 results are below:
February, 2025 2.9 percent
March 2.7 percent
April 2.6 percent
May 2.8 percent
June 2.8 percent
July 2.9 percent
August 2.9 percent
September 2.8 percent
October 2.7 percent
November 2.8 percent
December 3.0 percent
January, 2026 3.1 percent
February 3.0 percent
March 3.2 percent
April 3.3 percent
Tariff effects on PCE inflation showed up yet again in the headline PCE results on a “post-Liberation Day basis” – that is, from the time when, in April, 2025, the biggest wave of Trump 2.0 tariffs was imposed.
During the data year that has passed since then, headline PCE got 3.77 percent higher. The record for the final Biden year? Just 2.61 percent. Since the March release reported a Biden lead of 2.30 percent versus 3.32 percent, his record’s margin improved.
The post-Liberation Day basis core PCE story looks a bit better from a pro-tariff standpoint – but only fractionally so. Core PCE has worsened by 3.29 percent since April, 2025’s tariff binge, but increased by just 2.78 percent during the final Biden data year. That means that the Biden performance got a tick better from the March results – when his edge over Mr. Trump was 3.01 percent versus 2.51 percent.
An even better gauge of tariff effects on prices comes from durable goods prices – since items in that broad category generally have been subject to the heaviest and most consistent duties. Yet after these price increases slowed on a monthly basis between February and March by the fastest since last July (from one percent to 0.4 percent), durable goods prices rebounded to a 0.6 percent monthly advance in April – the strongest such increase since the 1.2 percent recorded back in January, 2022. Here are the Trump 2.0 results on this score:
February, 2025 0.2 percent
March -0.5 percent
April 0.5 percent
May 0.0 percent
June 0.5 percent
July -0.1 percent
August 0.1 percent
September -0.1 percent
October 0.1 percent
November 0.0 percent
December 0.5 percent
January, 2026 0.4 percent
February 1.0 percent
March 0.4 percent
April 0.6 percent
On an annual basis, durable goods PCE prices kept rising in April, too. But the pace (3.4 percent) was much slower than in March (when it worsened from 2.8 percent to 3.3 percent) and in February (when it jumped from 2.2 percent to 2.8 percent). Moreover, that April rise was the fastest since October, 2022’s 4.1 percent. The Trump 2.0 results are below:
February, 2025 -0.9 percent
March -1.0 percent
April -0.3 percent
May 0.5 percent
June 1.0 percent
July 1.1 percent
August 1.2 percent
September 0.9 percent
October 0.9 percent
November 1.0 percent
December 2.1 percent
January, 2026 2.2 percent
February 2.8 percent
March 3.3 percent
April 3.4 percent
And when the post-Liberation Day durable goods PCE price trends are examined, the Biden administration’s edge over Trump 2.0 widened from March to April – another indication of upward tariff pressure on prices.
Since Liberation Day, durable goods have gotten 3.37 percent more expensive. But they got 1.15 percent cheaper during the final 12 months of the Biden administration. With the Biden edge as of March at a 2.77 percent increase versus a 0.37 percent decrease, it’s clearly widened.
But as has been the case throughout Trump 2.0, the significant divergences in the numbers for specific tariffed goods – presented below – remind that many other factors than the trade duties influence prices. So piling all the blame on the tariffs can’t be justified.
April 25-March 26 April 25-April 26
Automotive: +0.002 percent -0.0008 percent
Furnishings & durable household equipment: +3.82 percent +3.69 percent
Recreation goods & vehicles: +4.55 percent +6.25 percent
Clothing and footwear: +3.37 percent +3.79 percent
And as if continuing Iran War- and tariff-related inflation uncertainties aren’t enough to cloud the outlook for bringing the cost of living under control, there’s a new Federal Reserve chair to try to figure out. So good luck navigating this complicated confusing terrain, Kevin Warsh. You’ll need it at least as much as anyone studying the U.S. economy.
