Inflation higher than expected. CNN rolls tape on Trump's economic promises

[00:00:00] Speaker 1: Inflation here in the United States is on the rise. The consumer price index has risen to 3.7%, meaning you're paying more for necessities such as gas and housing. This is the latest inflation report before the midterm elections, which are now just 20 days away. And polls are showing that Americans are fed up with higher prices and how President Trump is handling the [00:00:22] Speaker 2: U.S. economy. And according to a recent poll, Wolf, only 27% approve of how President Trump is handling the economy. That's down 22 points from the same time during its first term. President Trump has made several promises that under his administration, the economy [00:00:38] Speaker 3: would be great. Starting on day one, we will end inflation and make America affordable again to bring down the prices of all goods. But prices will come down. You just watch. They'll come down and they'll come down fast. We had the best economy in the history of our country in my first term, And we're blowing it out now. The economy is the greatest economy we've ever had by far. We have the greatest economy in history and people are going to start to see it. The U.S. economy, which is the number one economy in the world by far. We have the best economy we've ever had. Everything that you hear about, that you're cheering about tonight, the jobs are going to be unbelievable. Your costs are coming way down anyway. We're very close to winning. I mean, I think we've, I think we've won the world. That war is going to end very soon. And when it does, your prices are going to come tumbling down. They already are. [00:01:31] Speaker 2: All right. So let's bring in CNN Business EU reporter David Goldman. He is here to make it make sense. All right, David, today's question. President Trump promised a better economy. Has that happened? [00:01:42] David Goldman: Yes. Undeniably, actually, he is right. The economy looks great, actually. Unemployment is at 4.2%. We call that full employment. Retail sales, 1.2%. People keep spending despite high prices. That is a very good sign. And that is fueling a GDP forecast that's off the charts. 3.6% this quarter is a very large growth of the economy. So I think the question you're probably asking is, why do people hate it so much? And they do. 27% of Americans approve of this economy. That means 73% do not like it, according to a recent CNN poll. And there is some history with this. Remember, under President Biden, the economy didn't look all that great to some folks. Consumer prices were up 21.5% under the four years of President Biden. Gas prices were up 31% and paychecks were down. You lost out to inflation under President Biden. And the wealth gap grew significantly. If you were in the top 1%, well, your net worth went up 30%. But for the rest of us, in the middle 40%, it only gained 10%. The rich got richer, the poor not so much. So President Trump comes into office. And what does he say he's going to do? He's going to lower costs. He's going to lower lower interest rates. He's going to cut spending, cut taxes, and jobs are going to boom. Did he do it? Well, let's find out. Well, we know that costs are continuing to rise. Well, the fuel prices are going up. That sounds like the Iran war to me. Interest rates are going up, a consequence of the Iran war. Labor costs are going up. That's AI. Imported goods. Well, you know, tariffs are a big thing. And then chips and electricity, well, yeah, that's an AI thing too. Let's take a look at Trump's record. Was it his fault? Yeah, partially, yes. Maybe no here with AI. But there's a lot of blame for Trump's policies, making this even worse. And what does it look like now? Well, we have wage gains of 3%. That sounds pretty good. Your paycheck is getting bigger. But inflation, we just found out today, grew at a rate of 3.7% over the course of the year. That means inflation is eating your paycheck by quite a bit. Now, Social Security recipients are getting some good news. 3.6% gain in Social Security payouts next year. But at 3.7% inflation, they may be losing out. We'll find out next year. This chart shows how over the past three or so years, you were making more money than inflation until the Iran war happened. And then, all of a sudden, you have consumer prices going up and you have your pay going down. That gap is not fun for anyone. It means inflation continues to eat that paycheck. So did Trump deliver on his promises? Did he defeat inflation? Certainly not. Did he lower interest rates? Nope. Did he reduce government spending? Remember Doge? Whatever happened with that? Nope. Did he cut taxes? Yes, he did. But did we get the jobs boom? Kind of a mixed bag there. So a mixed record. But there's a lot [00:05:08] Speaker 5: to blame for Trump's policies making things worse, not better. I see an senior reporter, Matt Egan joining me now. How high did this go and what was expected? Well, Sarah, look, [00:05:19] Matt Egan: this is the final snapshot on consumer prices before the midterms. And this came in hot, surprisingly hot. This is a disappointing read on inflation and the fingerprints of the war are all over this report. Let's go through the top line numbers. So this is the new annual inflation rate as of September 3.7%. This is a big step in the wrong direction from 3.4% in August. And as you mentioned, this is a four month high. The monthly rate came in as expected, but it also went in the wrong direction at 0.6%. This is a six month high. Let's look at the trend for monthly inflation. What you can see here, this is the start of this year. You can see how there was this big inflation spike when the war started. And then there was this improvement. That's when gas prices plunged. There was hope of a lasting ceasefire. And now we've got, look at this, a whole bunch of months in a row going in the wrong direction. And when we look at the trend for annual inflation, what's clear here is we are nowhere near this dotted line, which is what the Fed targets. That's 2%. Nowhere near being able to declare mission accomplished on inflation. And you can see how inflation is higher right now than it was when the president started his second term. So what's going on here? Well, let's look at some of the drivers. Not surprisingly, the energy and the war impact. It's really clear here, right? So gasoline 34% more expensive year over year. That's because we have gas prices above 430 a gallon nationally. Look at this airfare, a 22% spike. That's because jet fuel has skyrocketed. Motor oil, 9% increase. That's the biggest increase for this specific category in three years. And again, this is related to the Strait of Hormuz and the war, but it's not just about the war though, right? We're also seeing that electricity is up more than 4%. That's above the overall rate of inflation. And that reflects, in part, a lot of demand driven by the AI boom. And then look at this, an almost 10% spike for computers and peripherals. This is really being driven by all the demand caused by the AI boom. The BLS has been tracking this category since 1998. And this is the biggest annual increase on record for this category. And again, it's all about the AI boom. There was some silver lining though here. Look at this food at home. This is groceries up by less than 2%. This is the best number of the president's second term. You have to go back to the end of 2024 to have a lower number than that. So that is encouraging. What we do have to point out though is that we have a situation where people's paychecks, they're getting completely gobbled up by inflation. If you go back two years ago, this blue line is paychecks, red line, that's prices. Look at this. You had a situation where for a while paychecks were going up faster than prices. And then that stopped being the case right when the war started. And now we have a situation where for six months in a row, for the half a year, real wages adjusted for inflation, they're getting smaller. So that helps explain why people just are feeling so frustrated and they feel like they can't keep it up right now because they literally can't in some cases. One last point for you here. New research out this week from Moody's Analytics. They're finding that the war with Iran since it started is costing consumers $265 billion. For the typical household, that works out to $2,000. And Sarah, this is a running tally. So the longer the war goes on, [00:08:46] Speaker 5: the more it's going to cost consumers. Certainly. Let's just quickly go back to the categories here because this is such a stark number here for people to have to deal with because this is something that you do weekly, you know, people refilling their gas. And when you look at the difference between what they're being paid and what they're paying at the pump or airlines or motor oil, it's nothing to do with a cost of living increase. It is so far beyond. It is. It's like you said, it's just, [00:09:13] Matt Egan: it's so in your face, right? You see the gas prices every day when you drive by. You feel it when you fill up at the gas pump. Before the war started, gas was below $3 a gallon. Now well above $4 a gallon. Airfare wasn't really a problem either. Neither was motor oil. All three of these categories have gone in the wrong direction since the war started. I did mention though groceries though. This is the silver lining. But one question here, Sarah, is how long is this going to last? Because we have a situation where diesel is near all time highs. That's lifting the cost to transport food. And you got to wonder whether or not food prices could start moving in the wrong direction as well because of diesel. Diesel [00:09:50] Speaker 5: numbers are huge. We are hearing from truckers complaining about those as well and businesses as well. Matt Matt Egan, thank you for this, thank you for--