U.S. consumer inflation took a breather in November, but the report was marred by missing data, leaving economists and policymakers with a puzzle to decipher. Here's a breakdown of the key points and what they mean for the economy and President Trump's political standing.
The Numbers:
- Consumer Price Index (CPI) rose 2.7% year-over-year in November, down from 3.0% in September.
- Monthly inflation rates were not published due to the 43-day federal government shutdown.
- Weekly jobless claims decreased 13,000 to 224,000.
- Continuing claims increased 67,000 to 1.897 million.
What's Happening?
The slowdown in CPI growth was partly attributed to the government shutdown, which delayed data collection until November's second half, when retailers offered holiday discounts. This created a distorted picture of inflation, making it harder to interpret trends accurately.
The Political Angle:
The White House, however, spun the report as a positive sign, with Trump's top economic advisor calling it "astonishingly good." This comes at a crucial time for Trump, who faces affordability challenges as basic goods and services like beef and electricity become more expensive. The higher cost of living will be a key issue in the 2026 elections as Trump and Republicans fight to retain control of Congress.
The Missing Pieces:
The absence of November's monthly CPI data due to the shutdown created a "Swiss-cheese" effect, making the report less reliable. Economists are now left to carefully analyze the delayed data, looking for signs of inflation's trajectory.
Looking Ahead:
Economists predict a rebound in December as businesses continue to pass on higher costs from import tariffs to consumers. The growth of artificial intelligence and cloud computing data centers is also expected to boost electricity demand.
The Core Story:
Excluding volatile food and energy components, the core CPI rose 2.6% year-over-year in November, the smallest increase since March 2021. This suggests that inflation is slowing, even if the overall report was distorted.
Labor Market Stability:
Initial claims for state unemployment benefits dropped 13,000 to 224,000 for the week ending December 13, indicating a stable labor market despite tepid hiring. The number of people receiving unemployment benefits increased 67,000 to 1.897 million, highlighting the ongoing challenges for some workers.
The Takeaway:
While the November CPI report was incomplete, it suggests that inflation is gradually easing. However, the political implications for Trump remain uncertain, as affordability concerns persist and the economy continues to evolve.
