I have a real concern about the reliability of inflation numbers. They are a fat target for Trump.

1. High inflation is a political negative for Trump since it can be blamed on his policies (tariffs, removal of immigrant work force) causing higher prices.

2. Higher inflation will cause the Federal Reserve to resist lowering the fed funds rate.

3. Higher inflation will increase the annual adjustment for Social Security which costs the government a lot of money.

4. Higher inflation increases interest payments on TIPS and I-Bonds.

5. Higher inflation will cause bond investors to demand higher interest rates for long-term bonds, regardless of the fed funds rate.

I would be surprised if Trump did NOT pick this low-hanging fruit by firing/ threatening the BLS statisticians.

Wendy

Macroeconomic Trends and Risks FAQ

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