The Wall Street Journal editorial board laid into President Donald Trump on Friday for failing to focus on the health of real wages in the economy, as inflation continues to eat into Americans' paychecks — and the Federal Reserve struggles to get a handle on the situation.
"The Labor Department on Friday reported that the consumer price index rose 0.4% in August, and 3.4% over the last year. While energy prices drove most of the monthly surge, that’s no consolation to consumers," wrote the board, which despite its conservative lean has been highly critical of Trump's economic policies.
Inflation in the core index wasn't as bad as usual, the board said — "But even here the reprieve has a caveat. The core index in August still climbed 0.3%, with increases for shelter (0.3%), used cars (0.4%), haircuts (0.4%), day care (1%), wireless phone service (5.9%), and motor vehicle maintenance and repair (1.1%). Inflation for many services has proven to be frustratingly stubborn, as anyone who’s eaten in a restaurant has surely noticed."
The ominous figure, the board wrote, is that real wages have declined 0.3 percent in the last 12 months — driven in large part by the war in Iran driving up energy prices — and the administration has no plans to do anything about it.
"Mr. Trump wants the Fed to lower interest rates this autumn because he thinks it will help Republicans in the midterm election," wrote the board. "That’s unlikely at this late point in the campaign. It might even backfire by signaling to financial markets that the Fed doesn’t mean what new Chairman Kevin Warsh says about conquering inflation. That could cause long-term bond rates to rise. That’s what happened in late 2024 when the Fed cut its benchmark interest rate."
Ultimately, the board concluded, "With the economy and especially the labor market (4.1% jobless rate) showing welcome resilience, getting inflation down is the top priority for the Fed. It’s also the best political remedy for Mr. Trump."