We’re Already Seeing Signs That Trump Is Tanking the Economy
Like the Fed, Vanguard is worried that Trump’s trade policies will increase so-called “core” inflation, or inflation minus volatile food and energy costs. On Friday the Commerce Department’s personal consumption expenditures index, which the Fed and Vanguard both prefer to the Labor Department’s consumer price index, showed core inflation to be 2.8 percent in November, same as it was in October. Trump promised in July that if voters elected him “inflation will vanish completely.” But Vanguard says that “inflation will remain above 2.5 percent for most of 2025.” Even Trump has stopped pretending he’ll conquer inflation, telling Eric Cortellessa in his Time “Person of the Year” interview, “It’s hard to bring things down once they’re up.”
In that same July speech, Trump said, “Incomes will skyrocket.” But according to the website Trading Economics, which compiles statistics from official sources, nominal wage growth will fall from its October level of 5.6 percent (and a projected 5.4 percent for the final quarter of 2024) to 4.7 percent, 3.5 percent, and 2.5 percent during the respective first, second, and third quarters of 2025. If Vanguard is right that inflation won’t fall below 2.5 percent next year, then real wages will either stop growing next year or start falling. Under Biden, real median and real average wages have been rising for two and a half years.
Of course, these are all predictions; we can’t know precisely what’s coming in 2025. But my own view is that these respectable calculations err on the side of optimism. The pros predict that the economy will fare somewhat worse. Freed of their imperative to give every benefit of the doubt, I believe the economy will tank. Your investments may appreciate in value, which is all the oligarchs really care about. But this time next year, I doubt your boss will promise you a raise for 2026. Instead, he may tell you to clean out your desk.
