Donald Trump will face a formidable economic landscape upon taking office. Inflation remains stubbornly high, manufacturing struggles, trade deficits widen, and fiscal deficits continue to mount.
Donald Trump will inherit an economy grappling with persistent challenges. Inflation has become entrenched at a high level, squeezing household budgets. While the bond and stock markets welcomed the softer-than-expected core inflation data, the areas that directly impact consumers, like food and energy, remain highly inflationary. The Federal Reserve's two percent inflation target seems increasingly elusive. Median CPI rose to 0.
3 percent month-over-month in December, after a brief dip in November, indicating that inflationary pressures are not easing. This translates to an annualized inflation rate of around 3.6 percent. The Cleveland Fed's trimmed mean CPI, which excludes the most volatile prices, also reached 0.3 percent, annualizing to approximately 3.2 percent. Despite some stability in indexes tracking prices paid by end-users, concerns remain. Prices for goods sold to businesses, which eventually become products purchased by consumers, rose 0.3 percent, signaling a potential shift from the past year's downward trend. Unprocessed goods for intermediate demand, the raw materials of the economy, surged by 3.2 percent, the largest increase since 2022, raising further alarms. The manufacturing sector continues to struggle, with the Institute for Supply Management's manufacturing purchasing managers survey revealing the 25th consecutive month of contraction out of the last 26. S&P Global's survey paints an even bleaker picture, with manufacturers expressing less optimism about future growth. Orders are declining, input costs are rising, and production growth is slowing. Additionally, the U.S. faces a widening trade deficit, exceeding $78 billion in November, significantly higher than the previous year. Fiscal deficits remain unsustainable, with the federal government borrowing $710 billion in the first three months of fiscal year 2025 alone. These economic challenges, coupled with ongoing concerns about global stability and geopolitical tensions, present a complex and demanding landscape for the incoming administration
ECONOMY INFLATION MANUFACTURING TRADE DEFICIT FISCAL DEFICIT
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