The U.S. economy experienced inflation acceleration in August, which was largely in line with market expectations, sparking a debate as President Donald Trump declared “No Inflation!!!” on social media. That claim was promptly challenged by economist Justin Wolfers, who asked, “No inflation? Says who?”.
Trump Takes A Jibe At ‘Total Disaster’ Jerome ‘Too Late’ Powell
Trump's post called for the Federal Reserve to “lower the RATE, BIG, right now,” describing Fed Chair Jerome Powell as “a total disaster”.
In response, Wolfers, a professor at the University of Michigan, pointed to the new data showing a 2.9% annual headline inflation rate and a 3.1% rate for core inflation, which excludes volatile food and energy prices.
See Also: Prices Are Rising, Jobs Are Gone — Can The Fed Stop A Stagflation Spiral?
Economists Reaffirm Belief In September Fed Cut
Economists broadly viewed the report as solidifying the case for a Federal Reserve interest rate cut next week.
While Jeffrey Roach, Chief Economist for LPL Financial, noted that “Headline inflation ran hotter than expected in August”, others emphasized the annual figures were predictable.
The core and headline CPI, “Both matched consensus expectations,” said Bill Adams, Chief Economist for Comerica Bank. Whereas, Comerica Wealth Management CIO Eric Teal highlighted that “The inflation numbers are still running above the Fed's 2% target, but looking at both PPI and CPI, the numbers appear contained.”
“The Fed may still cut, but this data argues for a gradual path, not an aggressive pivot,” commented Gina Bolvin, President of Bolvin Wealth Management Group.
Meanwhile, Chris Zaccarelli, the CIO at Northlight Asset Management, stated that “It's surprising to see how quickly the narrative has shifted from before last week's jobs report from whether or not there will be a cut in September, to how many cuts we will see after there is definitely a cut in September.”
Inflation Rises In August But Remains In Line With Expectations
The Consumer Price Index rose 0.4% for the month and 2.9% over the past year, according to a Bureau of Labor Statistics report released on Thursday.
The August inflation increase was driven largely by the shelter index, which rose 0.4% and was the largest contributing factor. The food index also increased by 0.5%, while the energy index saw a 0.7% rise, pushed by a 1.9% jump in gasoline prices. The rising costs of airline fares, used cars, and apparel also contributed to the monthly increase.
Price Action
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Thursday. The SPY was up 0.83% at $657.63, while the QQQ advanced 0.58% to $584.08, according to Benzinga Pro data.
On Friday, the futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were trading mixed.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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