Weekly Wisdom | Inflation Nation
Thoughts on Inflation
As I noted in my recent article, “The Cost of Living Crisis,” President Trump has made tackling inflation a defining priority. Many middle-class and working-class voters remain dissatisfied with today’s economic environment, and confusion persists about the causes of inflation, the data, and what is driving it.
Let’s learn more about inflation:
The current inflation rate is 2.7%. The cumulative inflation since the beginning of the coronavirus pandemic is an eye-popping 24%.
Most consumers want prices to fall from their current level, a phenomenon known as deflation. But to achieve that, either an economic contraction — like a recession or depression — has to occur, or productivity has to grow significantly. A situation with minimal inflation still doesn’t address the unacceptably high prices most Americans are facing unless… see next point.
The key measure of economic well-being is a nation’s purchasing power. If annual wage growth exceeds the rate of inflation, real wages rise and citizens are better off than they were a year earlier. If inflation outpaces wage growth, then purchasing power falls. Inflation must therefore be evaluated alongside other key indicators, such as productivity and employment levels.
Our government’s insatiable appetite for spending is the primary reason for the severe spike in inflation. The U.S. federal government spent a staggering $6.8 trillion in 2024 and is projected to spend $7 trillion in 2025. In both years, these expenditures amount to roughly 25% of U.S. GDP!
Unsurprisingly, the massive national debt of $37 trillion, combined with annual budget deficits of nearly $2 trillion, has exerted significant pressure on our currency and interest rates. The dollar index declined by 10.8% in the first half of 2025, while interest rates remain elevated.
In future articles, I’ll provide a detailed breakdown of the sources of inflation plaguing the average American household. For now, combating inflation needs to remain President Trump’s chief priority. That will require lower energy prices and an AI-driven productivity boom.
Go Further
https://youtu.be/ipFeWfafJzQ
https://youtu.be/ipFeWfafJzQ
