MUST SEE: Trump Policies Vindicated As June CPI Crushes…

Every single economist surveyed by Bloomberg ahead of Tuesday’s inflation report got it wrong, and not by a small margin. The Consumer Price Index fell a full 0.4 percent in June, the largest one-month decline in more than six years, delivering a stunning rebuke to the so-called experts who had spent weeks warning that Trump administration policies would send prices spiraling upward.

The Bureau of Labor Statistics reported that the all-items index decreased 0.4 percent on a seasonally adjusted basis in June, following a 0.5 percent increase in May.

It was the sharpest monthly drop in consumer prices since April 2020, when the entire economy had been artificially frozen by pandemic lockdowns. This time, there was no lockdown, no artificial shutdown of commerce. Prices simply fell.

White House officials wasted no time pointing out just how badly Wall Street’s finest had misjudged the situation. Bloomberg had surveyed 67 professional economists ahead of the release, and every one of them missed the negative 0.4 percent reading. Not a single forecaster among the 67 saw it coming. The consensus estimate had called for a much smaller decline of roughly 0.1 to 0.2 percent.

National Economic Council Director Kevin Hassett did not mince words in describing the scale of the miss. The actual number, he noted, came in four times more negative than what the experts had been expecting.

This was not a modest rounding error or a narrow miss within the standard margin of forecasting uncertainty. It was a wholesale failure of the professional forecasting class to understand where the economy was actually headed.

For months, critics of President Trump’s trade and energy policies insisted that tariffs and aggressive deregulation would ignite runaway inflation. Instead, the numbers tell a very different story. Core inflation, which strips out volatile food and energy prices, came in flat for the month and now sits at 2.6 percent year over year, below the 2.9 percent economists had projected and a marked improvement from May’s reading.

The primary driver of the decline was a dramatic drop in energy prices, which fell 5.7 percent in June alone after months of upward pressure earlier in the year.

Gasoline prices plunged nearly 10 percent for the month, providing direct and immediate relief to American families at the pump, precisely the kind of tangible economic benefit that matters far more to working households than any abstract policy debate in Washington.

Shelter costs, long one of the most stubborn components of the inflation picture, rose just 0.1 percent in June, the smallest monthly increase in that category since January of 2021. Housing costs have been one of the chief culprits keeping overall inflation elevated for years, so even this modest improvement represents a meaningful shift in the underlying trend.

The annual inflation rate fell to 3.5 percent, down sharply from 4.2 percent in May, marking the first deceleration in four consecutive months of accelerating prices. That earlier run-up had been driven largely by an energy shock tied to instability in the Middle East, a geopolitical situation entirely outside the control of domestic economic policymakers.

It is worth pausing on just how remarkable a forecasting failure this represents. These are not amateur bloggers or partisan pundits making predictions. These are professional economists at major banks and financial institutions, the same voices the mainstream media turns to again and again to cast doubt on the administration’s economic agenda. And every last one of them missed badly.

The pattern is a familiar one for anyone who has followed economic commentary over the past several years. Legacy financial media outlets have repeatedly platformed economists predicting doom for the American economy under Trump’s leadership, from recession warnings to inflation spirals, only to see those predictions fail to materialize time and again.

To be fair, administration officials and independent analysts alike caution that one month of positive data does not erase the broader inflation challenges the country has faced. Newly installed Federal Reserve Chairman Kevin Warsh struck a notably cautious tone following the release, warning that some observers might look at the data and declare victory prematurely. That is not his view, he said, and the central bank remains focused on getting policy right for the long term.

There is real substance behind that caution. Oil prices have already begun climbing again in July following renewed hostilities in the Middle East, and administration critics note that a single month of favorable energy-driven data should not be mistaken for a permanent trend. Economists at BMO Capital Markets and elsewhere have pointed out that the ceasefire-related price relief could prove temporary if the conflict drags on.

Even so, the scale of the forecasting miss deserves attention on its own terms, separate from the debate over whether June’s numbers will hold.

When every single professional forecaster surveyed by one of the most respected financial data services in the world gets the direction and magnitude of a major economic indicator wrong, it raises legitimate questions about the models, assumptions, and possibly the political biases driving those forecasts in the first place.

Conservative economists have long argued that mainstream forecasting models are too quick to assume that Trump-era policies, particularly on trade, energy production, and deregulation, will produce inflationary outcomes without giving adequate weight to the disinflationary effects of increased domestic energy production and reduced regulatory burdens on businesses.

The June report offers at least some early evidence supporting that alternative view. Increased domestic energy output, ongoing efforts to expand drilling and refining capacity, and a general push toward deregulation across multiple sectors of the economy may be contributing to price relief in ways that conventional forecasting models simply failed to capture.

Food prices did rise 0.2 percent in June, a reminder that not every component of the inflation picture is moving in a favorable direction. Grocery costs remain a persistent source of frustration for American families, and no single month of data changes the cumulative price increases households have absorbed over the past several years.

Still, taken as a whole, the June CPI report represents a genuine data point in favor of the administration’s argument that its economic policies are working, not against it, as so many in the financial press predicted. The largest monthly decline in six years, a cooling core reading, and a complete forecasting failure among 67 professional economists are not a footnote. It is a headline.

Markets reacted with cautious optimism to the news, with some analysts suggesting the report gives the Federal Reserve additional room to hold rates steady rather than pursue further tightening.

Ellen Zentner of Morgan Stanley Wealth Management noted that the cooler-than-expected report gives the Fed room to breathe and relieves immediate pressure for aggressive action.