Weekend Update
Media Hit, 12/20/25
I’m going back on the Randy Tobler Show in the morning to continue our conversation from last weekend and to talk about some of the new things that have come out and that are… happening.
Specifically, the latest CPI report, the speech that Trump gave during prime time on Wednesday, and the portions of the OBBBA that are coming online when the new year starts. I also sent Randy this article that I had published earlier this week, as if we don’t have enough to talk about already :)
I figure we can take these things in order:
Latest CPI Report
The headline that everyone is gravitating toward is that inflation actually came in below what everyone was kind of expecting. The BLS reports that inflation was about 2.7% when the expected announcement was closer to 3% or 3.1%.
Some economists are seeing this report as potentially flawed.
For example, the BLS just… isn’t going to release October data due to the shutdown (apparently). But that throws off some of the methodology that they use in calculating these figures. How the BLS handles the “missing data” could be influencing some of the end results.
The BLS may have carried forward some prices, which basically means that in some categories, they implicitly assumed that there was zero inflation for some goods.
If you add a bunch of zeroes to your data, the average is going to go down. By how much, though, is tougher to answer without a deep dive.
It’s also the case that the prices they used may have included e.g. holiday discounts going on, which would also bias the CPI figures downward.
My AIER colleague, Peter Earle, has an excellent post up about this and comparing it to our own Everyday Price Index.
Bottom line: we should be cautiously optimistic about this report, but we should also understand that there are some problems with it. It will be interesting to see if this trend continues or if this is a blip in an area that is otherwise characterized by 3% inflation.
Trump’s Speech
I was actually in DC during this speech and was preparing to give a lunch briefing to a bunch of staffers the day after this, so… I watched it live from my hotel room. It was definitely something.
Apparently, the broadcast networks agreed to give him 15 minutes (note: he took 18 or so), which explains why this speech was so uncharacteristically short - and probably why he seemed to be talking so fast.
Look, there were a lot of just flat out falsehoods in the speech.
The tariffs are not bringing in “trillions of dollars” in revenues.
One could make the argument that we’ve seen companies publicly announce major investments in building in the US, sure. But…
1) The White House says that that number is $9.6 trillion and
2) How much of that will is real and will actually materialize and how much of that is CEOs saying a “big enough number” to get special, crony capitalist exemptions?
One year ago, the American economy was not “dead.”
Here’s a seven part report from The Economist on how awesome the American economy was doing. That was released in October of last year.
Prices in the US are not falling, let alone falling fast.
Some prices are down (eggs, for example) but they were artificially high because of bird flu and farmers having to kill millions and millions of chickens a year or so ago.
In fact, even if we accept the CPI number above, prices are still rising, not coming down.
But my favorite? Those $1,776 checks to military members.
When I heard him talk about that, my ears perked up. As someone who used to work for the Senate Budget Committee, I know a thing or two about the President’s ability to just spend money. Fun fact: he can’t do it unilaterally, Congress must act to authorize him to spend any money.
The money for this? It’s coming from money that was previously appropriated for the troops.
In other words, Trump is sending troops two checks: one for $1,776 that he talked about during his speech, the other for $1,776 less than what the troops were already going to be getting anyway.
One Big Beautiful Bill Act Coming Online
Several aspects of the OBBBA are going to be taking effect starting on Jan. 1.
This timeline, admittedly by a biased source, is helpful in keeping things straight.
Some of the headline grabbing items that take effect on Jan. 1: no tax on tips, no tax on overtime, no tax on auto loan interest payments for domestically produced cars, Trump accounts begin,… you get the picture.
Some of these are pretty solid. Do they make up for all the other things going on? Unclear. But there are certainly aspects of this that seem like they could have a positive impact.
I’ll have more to say on this last one tomorrow, but for now… I’m tired. I had a 6:00 AM flight out of DC this morning and didn’t get to sleep on the plane because of turbulence and people being very freaked out by the plane bumping around a bit. Suffice it to say: I’m tired.