Mission Accomplished on Inflation?

President Donald Trump delivered a confident assessment of the inflation situation on Monday, telling reporters at the White House that inflation is "essentially gone" and poised to decline even further. "We have it normalized. And it will go down even a little bit further," Trump said.

But here's where things get interesting. Trump quickly added a caveat: he doesn't want deflation either. "We don't want it to be deflation either. You gotta be careful," the President warned. It's a bit of economic tightrope walking—inflation is bad, but so is deflation, and threading that needle requires precision.

Trump also took the opportunity to criticize the previous administration, claiming his team inherited elevated inflation from the Biden years.

Economic Action on Multiple Fronts

The President's inflation commentary coincided with several significant economic policy moves. His administration unveiled a substantial $12 billion financial rescue package aimed at U.S. farmers who've been squeezed by depressed market prices and the ripple effects of tariff policies.

Over the weekend, Trump signed an executive order establishing food supply chain security task forces within both the Justice Department and the Federal Trade Commission. The mission? Root out price fixing and other anti-competitive behavior that could be driving up grocery costs.

The Deflation Debate

Treasury Secretary Scott Bessent struck an optimistic tone, forecasting 3% GDP growth by year's end. He attributed recent price increases to the service economy rather than tariffs and pushed back on affordability concerns by pointing to rising real income.

Economist Justin Wolfers offered a different perspective, arguing that Trump created unrealistic expectations during the campaign by promising outright price declines. The reality? Prices rarely fall in a healthy economy. Many Americans are waiting for those drops because of campaign pledges, Wolfers noted, but the typical post-inflation pattern involves rising wages catching up to prices—not deflation. And that wage growth isn't materializing as expected.

The latest economic data paints a mixed picture. Personal income climbed $94.5 billion in September, a 0.4% increase that beat the 0.3% consensus, fueled by higher wages and asset income gains. Meanwhile, Core Personal Consumption Expenditure—the Federal Reserve's preferred inflation gauge—decelerated from 2.9% to 2.8%, coming in just under the 2.9% forecast.