Trump’s Economic Plans Strained by Rising Inflation

Rising inflation continues to challenge the U.S. economy, with housing costs playing a significant role.

They now make up a third of the Consumer Price Index (CPI), and while housing price growth slowed, inflation in the sector still increased, contributing to nearly 40% of the overall rise in November.

This poses a major obstacle for President Trump’s economic agenda, as housing costs stand in the way of reaching the Federal Reserve’s 2% inflation target. Although rents are decreasing, the pace isn’t enough to curb the overall inflation. On top of this, the housing supply remains constrained, still 17% below pre-pandemic levels, while demand persists, keeping prices elevated.

Mortgage rates have further compounded the issue, making homes less affordable. Rents have surged by 30% in the last four years, and October saw a 3.3% year-over-year increase in the average rent. Despite rate cuts by the Federal Reserve, mortgage rates have continued to climb, intensifying the affordability crisis.

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Trump’s push for deregulation aims to help by easing construction barriers and unlocking federal land for housing. However, his influence over monetary policy is limited. The Federal Reserve’s autonomy means any rate changes will take time, and while some economists remain hopeful that rent increases could eventually slow, housing costs still present a tough hurdle.

Inflation is also spilling over into other sectors, particularly services. Although wage growth has slowed, service inflation remains high, further straining Trump’s economic plans. With inflation expectations rising and uncertainty about the impact of Trump’s policies, the economic outlook remains uncertain. While tech stocks have thrived, analysts are divided on the sustainability of the market’s recent gains.

Alexander Zdravkov