Remember all those economists who get paid six figures to predict economic numbers? They whiffed again, and this time it was not even close. The June Consumer Price Index report dropped Monday morning and, as USA Journal reported, consumer prices fell 0.4% from May. That is the biggest single month drop in over six years. Every Bloomberg economist surveyed had forecast a 0.1% decline. So they were off by a factor of four, which is the kind of margin that gets you fired from most jobs but apparently earns you a recurring segment on cable news.
Annual inflation came in at 3.5%, well below the 3.8% the experts predicted and a sharp drop from May's 4.2%. Core CPI, the number the Federal Reserve watches like a hawk because it strips out food and energy, landed at 2.6% year over year. Analysts expected 2.8%. Month over month, core CPI was flat. Zero. The number you get when you multiply anything by nothing. Stock futures surged the moment the data hit.
Fox Business host Maria Bartiromo called it an excellent number. The White House Rapid Response team pointed out the report was four times more negative than what experts forecast, which is the kind of flex that writes itself.
So what drove the drop? Gasoline prices fell nearly 9% in June. The source article attributes this to the administration's energy policy, the collapse of Iranian oil leverage following Operation Epic Fury, and a domestic energy sector that has basically been told to drill without catching grief for it. When you stop treating American energy production like a villain in a documentary and start treating it like a strategic asset, prices tend to cooperate. This is not advanced economics. This is cause and effect.
The timing could not be more interesting. Fed Chair Kevin Warsh heads to Capitol Hill today for his first Congressional testimony since replacing Jerome Powell. He gets to walk in with the best inflation number in years sitting right there on the table. The pressure to start cutting interest rates, which have been squeezing American borrowers for two years while the Fed cleaned up the post-Biden inflationary mess, just got a whole lot harder to ignore.
Remember all those predictions about Trump's tariff policy triggering an inflationary spiral? The Wall Street Journal editorial board worried. Economists warned. Media outlets ran breathless segments about grocery prices. The CPI report is the data's response to all of that: annual inflation dropped nearly a full percentage point in a single month, beating every expert prediction by a margin that is genuinely embarrassing for the prediction business.
Biden era inflation peaked at 9.1%. Trump inherited that situation along with the sky high interest rates that followed, and is now presiding over the fastest sustained inflation decline in recent memory. Meanwhile, the same analysts who missed this number by 300% are still being booked as the authoritative voices on economic policy. At this point, you could get better forecasts from a Magic 8 Ball, and the Magic 8 Ball would at least have the decency to say "outlook uncertain" instead of pretending it knew what was coming.
Read more conservative news commentary at: USA Journal News
