While I’m the first to admit the tariff strategy might backfire and unintended consequences could abound, good economic news outside the stock market is almost everywhere, contrary to the predictions of the experts.
Last week, the price of eggs made headlines once again when a report found they broke another record in March, contrary to recent claims by the Trump Administration that prices were, in fact, falling. The Associated Press phrased it this way, “US egg prices increase to record high, dashing hope of cheap eggs by Easter,” subtly suggesting that President Donald Trump had ruined an upcoming holiday. “U.S. egg prices increased again last month to reach a new record-high of $6.23 per dozen despite President Donald Trump’s predictions, a drop in wholesale prices and no egg farms having bird flu outbreaks,” the article began. “The increase reported Thursday in the Consumer Price Index means consumers and businesses that rely on eggs might not get much immediate relief. Demand for eggs is typically elevated until after Easter, which falls on April 20.” The only problem is: Prices started falling rapidly in the middle of the month, a point they didn’t acknowledge until the very end of the article. “U.S. egg prices did began falling in mid-March, according to Datasembly, a market research company that tracks prices at thousands of stores. Datasembly said eggs averaged $5.98 per dozen the week beginning March 16 and dropped to $5.51 the week beginning March 30.” In other words, the month ended with eggs costing almost $.75 less per dozen even with what the Associated Press described as the Super Bowl of eggs coming up and they began declining less than two months after President Donald Trump took office. Similarly, one might not have noticed amid the tariff-obsessed headlines, but the March Consumer Price Index overall, generally the standard metric to gauge inflation, fell to 2.4% complete with the first decline in actual consumer prices in five years, and the equally important Producer Price Index declined as well in what would normally be considered good news all around. As CNN described it, “US wholesale prices fell last month, new data showed Friday, an indication that inflationary pressures weren’t necessarily building before they reach the consumer.” Overall, producer prices fell 0.4% in March, slowing “sharply to an annual rate of 2.7%, from 3.2%…It followed a similarly encouraging Consumer Price Index report, which on Thursday showed that overall inflation cooled for the goods and services Americans commonly purchase.”
In both cases, economists had predicted the opposite, a larger than expected Consumer Price Index of 2.6% and a completely incorrect Producer Price Index which saw prices rising instead of falling. What accounts for the disconnect? According to the US Bureau of Labor Statistics, energy and fuel prices began falling sharply with gasoline dropping a whopping 9.8% on an annual basis, which at least to a layman such as myself seems like a really big deal that should have factored into their thinking. Given President Donald Trump’s long held belief and long stated focus on lowering the cost of energy to address inflation, one might think this would be greeted as potentially early evidence that his policies were working. Instead, the same experts who were wrong in the first place promptly insisted this was, in fact, bad news. CBS News, for example, considered possible reasons for declining prices that were much less positive in their minds, “Another reason prices fell was sharp drops in travel-related costs, including airfares, which decreased 5.3% just from February to March. Hotel room prices dropped 3.5%,” but “Economists said those declines in part reflected much slower international demand as the number of tourists visiting the United States has fallen sharply amid Trump’s aggressive trade policy.” Nor was CNN’s reporting any more bullish about our potential future. In their minds, the report only “underlines the strength of the US economy before Trump’s tariff chaos.” “Inflation was on a cooling course heading into the tariff shock,” they quoted Oren Klachkin, Nationwide’s financial markets economist, who wrote in a note to clients last Friday. “But like yesterday’s CPI report, today’s PPI data offer little comfort in the face of significant uncertainty, major trade policy changes and financial market turmoil.” Overall, CNN cautioned, “Economists have warned that the sharp escalation in America’s effective tariff rate will result in higher prices for businesses and consumers as well as disrupt the global economy, possibly triggering a recession.” In fact, the inflation data actually “hints at a slowdown” even though we’ve been fighting to get inflation back down two percent for almost three years, which means this is exactly what we wanted until now, apparently. “Those recession fears factored in to the latest inflation data somewhat. The sharp drop in overall PPI was partly attributable to broader concerns that the global economy will slow because of that drastic shift in US trading policy.” They too saw declining energy costs, despite that the President has signed multiple executive orders to do precisely that, including a series of orders on clean coal last week itself, as a bad sign because “Energy prices typically move higher this time of year; however, they moved lower last month because of a supply-demand imbalance as well as recession concerns weighing on crude oil prices.” Prices for services also declined by .2%, which at first glance might be attributed to the drop in energy prices given one cannot provide services without energy, but this was also seen as a bad sign, another warning of a recession. It “shows that the economy is weakening,” explained Eugenio Alemán, chief economist at Raymond James. “Services prices have remained relatively strong, and we have seen both on the CPI side and on the PPI side that the services prices have weakened somewhat.” “That’s good for inflation, but it might also be pointing to a slowdown in economic activity,” he added, hiding behind “might,” “also,” and “pointing to” given he might be entirely wrong.
Of course, it’s worth mentioning that the entire point of the Federal Reserve’s high interest rate policy has been to intentionally slow down economic activity, but this is apparently a different time entirety than it was just a few months ago, as in, “In a different time, this report could be an indication that the Federal Reserve’s efforts to dampen demand and rein in inflation were working.” In other words, when President Trump is in office at least, nothing works the way it should, and up has suddenly become down. Regardless, “We’re writing our weekly note today, and one of the subtitles is, ‘Way to make good inflation numbers go to waste,’” Mr. Alemán concluded. “It is good news that companies are not seeing more pressure on prices, which will help counteract any pressures that will start to build as tariffs go into effect.” Perhaps needless to say, he completely failed to mention that these developments can also be seen as critical elements of the President’s multi-pronged approach to the economy which includes downward pressure on prices by reducing the cost of energy, regulations, and taxes, perhaps a offset by increases due to tariffs with the aim of increasing American manufacturing. While it might be too soon to say whether that approach will ultimately work, CNN’s own reporting later in the same article clearly indicates that the impact of tariffs on prices could be substantially less than the experts are claiming as we speak. For example, steel was among the few prices that increased in March, “the second month that tariffs on Chinese goods were in effect (rising from 10% on all imports to 20% in early March); the global 25% tariffs on steel and aluminum imports went into effect on March 12,” but actual prices on wholesale iron and steel increased by significantly less than 10%, 7.1% to be precise. This was the largest increase since April 2021 to be certain, but it’s barely a quarter of the tariff and measurably less of an increase than the decrease in energy prices, suggesting that a balance can be struck at least in principle. CNN doesn’t make this connection, of course, nor are the recent PPI and CPI reports the only economic data where the actuals were at odds with the expert’s predictions of continued doom and gloom. A week earlier, the March jobs report nearly doubled expectations, coming in at an actual 228,000 jobs added compared to an estimate of 140,000 jobs. The differential was at least partially due to the expert’s insistence that government layoffs initiated by President Trump would negatively impact the job market in addition to the entire world as we know it. A day before the positive jobs report, however, was busy claiming that “Layoffs announced by U.S. employers surged in March to the highest level since the pandemic recession as the government purged federal workers and contractors to slash spending. Global outplacement firm Challenger, Gray & Christmas said on Thursday that planned job cuts increased 60% to 275,240 last month, the highest level since May 2020, when the economy was reeling from the first wave of the COVID-19 pandemic. It was also the third highest monthly total on record.” They continued, “Challenger said it had over the past two months tracked 280,253 planned layoffs of federal workers and contractors impacting 27 agencies. Another 4,429 job cuts were from the downstream effect of cutting federal aid or ending contracts, impacting mostly non-profits and health organizations.” The actual jobs reported showed a large increase in overall employment, however, even with a decrease of about 4,000 federal jobs pulling the number down slightly and ironically, healthcare, which was expected to be negatively impacted per the quote, showed the largest job gains at 54,000 continuing their approximately 12 month average.
Regardless of these positive numbers in defiance of expectations, reporting on the report continued to focus on tariffs almost to the exclusion of all else. “Though the headline number beat estimates, the report comes against a highly uncertain backdrop after President Donald Trump’s tariff announcement this week that has intensified fears of a global trade war that could damage economic growth,” CNBC claimed. “Today’s better than expected jobs report will help ease fears of an immediate softening in the US labor market,” explained Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management. “However, this number has become a side dish with the market just focusing on the entrée: tariffs.” “While Friday’s jobs report showed that the economy is still adding jobs even with the tariff uncertainty and Federal job cuts, the data is backward looking and doesn’t say anything about how employers might fare over the coming months,” echoed Glen Smith, chief investment officer at GDS Wealth Management in what amounts to something that can be said about anything when the future remains unknown to mere mortals. At the same time, the experts’ forward looking data isn’t optimistic either and hasn’t been since President Trump took office, a complete inversion of the predictions four years ago when President Joe Biden was sworn in. The Atlanta Federal Reserve, for example, has been predicting a decline in first quarter Gross Domestic Product since February. Before then, as in right up until President Trump returned to the Oval Office, they were predicting growth between 2% and 4%, but then suddenly, before any policies had actually been enacted or actual data was in, their numbers “magically” declined. As Forbes recently put it, “The disturbing news is that [the economy] could be slowing far faster than the overall Federal Reserve expected, potentially into the realm of contraction that could set the stage for a recession. The Atlanta Fed’s GDP growth predictor’s estimate on March 28 was that the first quarter would see -2.8% growth.” Other economists are slightly more optimistic, believing we will see anemic growth of .3% as, once again, “tariffs stoke stagflation conditions.” Of course, the use of the term stagflation is rather rich given that’s exactly what we’ve experienced for the past three years, though no economist described it as such. A few paragraphs later they note, rather helpfully it seems, that “the rough rule of thumb that two consecutive quarters of negative economic growth means a recession,” a rule that was not applied either when we experienced exactly that under President Joe Biden when there were two quarters of completely unexpected negative growth, quickly rationalized away.
Still, in their view “Any growing pessimism isn’t a product of the ether. Multiple trends are coming together in a macroeconomic tapestry. One is the danger that a lack of federal government fiscal discipline has increased the possibility of yet another credit downgrade. The Congressional Budget Office’s projection of future deficits is discouraging. The labor market is under strain, even as unemployment remains low. Tariff disruption is jarring markets with the additional potential of driving inflation up.” Considering that tariffs are the only new development, what accounts for the sudden pessimism other than their obvious hatred of President Trump? While I am the first to admit it’s possible his tariff strategy will backfire and unintended consequences will abound, good economic news outside the stock market is almost everywhere. The media and the experts are simply lying to you about it at worst, or doing their best to hide it, and they still wonder why few listen to them anymore.
Confessions of a Conservative Atheist 