After a combative defence of his record on the economy on Wednesday, Donald Trump was feeling vindicated on Thursday after November’s inflation data came in cooler than expected.
But, as noted by the Financial Times, Wall Street was less than impressed, greeting the Bureau of Labor Statistics’ figures with a sceptical shrug. And bond markets barely budged as the missing data diminished the report’s value.
“We need to acknowledge that this data is a mess,” Thomas Simons, chief US economist at Jefferies, was quoted as saying in the FT, adding that there were “encouraging signs of disinflation, but something feels off”.
The doubts about the data are rooted in the fact that the Bureau of Labor Statistics, long seen as the global gold standard, was closed during the federal shutdown that lasted from early October to mid-November.
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“It’s probably not a good idea to turn off the navigation lights on the US economy for over a month. I think we are learning that you can’t just switch the lights back on and everything immediately becomes clear again,” said Erika McEntarfer, the agency’s former chief who Trump sacked this summer after one underwhelming jobs report.
The October consumer price index report was suspended entirely. And the November figure, published on Thursday, relied on data collected during the second half of the month – a period when prices are artificially low due to Black Friday sales.
As a result, there were incomplete entries and estimated figures in the release.
On Wednesday, during that combative televised prime-time address from the White House, Trump claimed that inflation had “stopped”. In the Oval Office on Thursday, he added that the latest figures showed that there was “practically no inflation”, even though the annual CPI rose by 2.7 per cent. The Fed targets 2 per cent inflation using another gauge.
With his poll numbers suffering due to cost-of-living pressures, and Democrats increasingly bullish about upcoming midterm elections, Trump and his acolytes can ill afford a setback on inflation if subsequent more comprehensive numbers show November to be an outlier.
As noted by the FT, Omair Sharif of Inflation Insights warned the Trump administration: “The risk of taking a victory lap ... is that it’s going to bounce back next month. You’re going to have to backtrack and talk people down.”
