Flawed inflation data dashes Donald Trump’s hopes of a quick affordability victory

White House hails figures showing cooling price growth but Wall Street says report was 'a mess'Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.Donald Trump was feeling vindicated on Thursday after November’s inflation data came in cooler than expected, bolstering his claim of progress in curbing prices, his thorniest political liability.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.But Wall Street met the Bureau of Labor Statistics’ figures with a sceptical shrug. Bond markets barely budged as economists and investors said missing data diminished the report’s value.“We need to acknowledge that this data is a mess,” Thomas Simons, chief U.S. economist at Jefferies, wrote in a note, saying there were “encouraging signs of disinflation, but something feels off.”Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.The doubts about the data were rooted in the fact that the BLS, a statistics agency long seen as the global gold standard, was closed during the federal shutdown that lasted from early October to mid-November.“It’s probably not a good idea to turn off the navigation lights on the U.S. economy for over a month. I think we are learning that you can’t just switch the lights back on and everything immediately becomes clear again,” said Erika McEntarfer, the BLS chief Trump sacked this summer, who is now a distinguished fellow at the Stanford Institute for Economic Policy Research.The October consumer price index report was suspended entirely. The November figure, published on Thursday, relied on data collected during the second half of the month — a period when prices are artificially low due to Black Friday sales. As a result, there were incomplete entries and estimated figures in the data release.The number of series within the main CPI report that were not adequate for publication jumped to 45 in November from 17 in September.The episode adds to the sense of turmoil at the heart of America’s leading economic institutions, with deep discord at the United States Federal Reserve, a series of disrupted official reports, huge variation in its tariffs on imports and a president who has made unfounded claims about having fixed the country’s affordability crisis.The haze overhanging the world’s biggest economy is affecting decision-making on everything from business and investment to government policies.In August, the U.S. president sacked McEntarfer after a lacklustre jobs report, leaving the agency that produces flagship inflation and labour data with an interim leader.It has also been beset by chronic funding shortages that have left it drained of staff and forced the BLS to trim data collection for the CPI, which underpins trillions of dollars’ worth of financial instruments and social security payments to America’s elderly.And under pressure from weak polling numbers, the president has been making outlandishly optimistic claims about the economy that have been striking even by his own standards of embellishment.On Wednesday, during a televised primetime address from the White House, he claimed that inflation had “stopped.” In the Oval Office on Thursday, Trump added that the latest figures showed that there was “practically no inflation,” even though the annual CPI rose by 2.7 per cent. The Fed targets two per cent inflation using another gauge.“In this situation when the data are really unsure, it plays into Trump’s predilection, which is that ‘if I say it enough, I’ll make it be true’,” said Doug Holtz-Eakin, a former White House economic official under George W Bush and president of the American Action Forum, a right-of-centre economic think-tank.White House officials seized on the upbeat inflation data with gusto. “It was just an absolute blockbuster report,” Kevin Hassett, the director of the National Economic Council and a top candidate to replace Jay Powell as chair of the Fed next year, told Fox Business on Thursday.For the U.S. central bank, such an unexpectedly soft inflation report should be bolstering expectations of further interest rate cuts in 2026. Even before Thursday’s data, Stephen Miran, a Fed governor chosen by Trump who is on leave from his post as chair of the White House Council of Economic Advisers, said interest rates were being held too high because of “phantom inflation.”Afterwards, he wrote on X: “It’s not a good practice to accept all the upward biases and then rush to disregard any downward bias. Or vice versa. Let’s be clear-eyed about both. Today’s data brings the overall series closer to a fair read on underlying inflation.”It’s not a good practice to accept all the upward biases and then rush to disregard any downward bias. Or vice versa. Let’s be clear-eyed about both. Today’s data brings the overall series closer to a fair read on underlying inflation.Mike Reid, an economist at RBC Capital Markets, said the data “quirks” in the report made it “hard to digest.”He added: “The question remains, is this report enough to convince the Fed that inflation will continue to slow? We expect they will treat this as a one-off given the disruptions surrounding data collection in both October and November.”The last major disruption to U.S. economic data came at the start of the coronavirus pandemic in 2020, when the BLS struggled to keep pace with the rapid changes in the labour market as well as the disruptions to actual data collection. But the latest disarray seemed more avoidable.“We’ve not, in my lifetime, had an economic shutdown that disrupted the actual collection of economic data, and particularly at such a crucial moment when we’re trying to sort out where the Fed should be,” said Holtz-Eakin.This year, federal statistics agencies have been under sustained pressure as their resources are curbed while they face increased political scrutiny.Joe Brusuelas, chief economist at consultancy RSM, said there was a risk that Thursday’s data could lead to unfounded claims of government interference.“I really want to . . . state the Trump administration did not attempt to fix this. This is just a simple error in judgment due to insufficient time and resources. Period.”Still, Omair Sharif of Inflation Insights had a warning for the Trump administration: “The risk of taking a victory lap . . . is that it’s going to bounce back next month. You’re going to have to backtrack and talk people down.”© 2025 The Financial Times LtdPostmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.