By Gloria Ogbonna
President Donald Trump opened his State of the Union address with a strong focus on the U.S. economy, declaring a significant victory over inflation—an issue that had weighed heavily on American families in recent years.
He emphasized that his administration had made rapid progress in bringing inflation under control after what he described as a damaging surge during the previous administration, which he said weakened the nation’s economic recovery following the COVID-19 pandemic.
Trump told lawmakers and Americans watching nationwide that inflation, which had reached historic highs, had been dramatically reduced during his first year back in office. He pointed to recent data showing that core inflation—excluding volatile food and energy prices—had fallen sharply.
“The Biden administration and its allies in Congress gave us the worst inflation in the history of our country,” Trump said. “But in just 12 months, my administration has driven core inflation down to the lowest level in more than five years. In the last three months of 2025, it was down to 1.7 percent.”
Economic figures appear to support the claim that inflation has cooled significantly. The three-month annualized rate of the consumer price index (CPI), excluding food and energy, stood at 1.7 percent at the end of 2025.
The last time inflation was this low was in early 2021, during the transition period between Trump’s first term and President Joe Biden’s administration. Just one year earlier, near the end of Biden’s presidency, core inflation was notably higher, at around 3.1 percent.
Looking at the broader quarterly picture, the average inflation rate over the final quarter of 2025 was about 2.2 percent, a clear improvement compared to the 3.4 percent recorded at the end of 2024. This steady decline suggests that inflation pressures have eased considerably during Trump’s return to office.
The progress has surprised many economists and policy analysts who had predicted the opposite outcome. Before Trump took office again, numerous economic experts warned that his policies—especially tariffs on foreign goods, immigration restrictions, and tax cuts—could worsen inflation by increasing costs for businesses and consumers.
Critics argued that tariffs would drive up the price of imported goods, while tighter immigration policies might reduce the labor supply, pushing wages and prices higher. Others warned that tax cuts could stimulate excessive spending, adding inflationary pressure to the economy.
However, recent data suggests that inflation in goods most affected by tariffs has remained relatively modest. Government measures show that core goods prices, excluding food and energy, increased just 1.1 percent year-over-year through January.
On a three-month annualized basis, those prices rose only 0.4 percent—well below historical averages and far from the surge many economists feared.
Overall, core CPI inflation stood at 2.5 percent year-over-year in January. Since this measure typically runs slightly higher than the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, it indicates that inflation may now be close to the Fed’s long-standing 2 percent target.
Other indicators also suggest inflation is stabilizing. Median CPI, which economists often use to measure underlying inflation trends, showed an annualized rate of 2.35 percent in January—below its long-term averages over the past decade, 15 years, and even 25 years. Another measure, known as the trimmed mean CPI, showed similar results, reinforcing the view that inflation pressures are easing across the economy.
In fact, price declines have been recorded in a significant portion of consumer goods. Roughly 23 percent of individual CPI categories saw prices fall over the past year. When focusing only on goods and excluding services, that figure rises to more than 25 percent—meaning one in four core goods became cheaper.
At the same time, American workers have seen improvements in their purchasing power. After adjusting for inflation, real average weekly wages rose by 1.9 percent through January, marking the fastest pace of real wage growth since early 2021.
This increase significantly exceeds long-term averages and suggests that workers are beginning to benefit from lower inflation and stronger earnings.
Despite these positive trends, debate continues among economists and policymakers. Some critics argue that inflation could have fallen even further without certain policies, while supporters credit Trump’s economic approach for the turnaround.
Still, the latest figures indicate that inflation, once seen as one of the nation’s biggest economic threats, has cooled considerably.
For Trump and his supporters, the numbers represent a major achievement and a central talking point as his administration continues to shape economic policy.
As Trump declared in his speech, the recent economic performance signals what he described as a new era of financial strength and stability for American workers and families.
Source Breitbart
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