Consumers Are Left Out in the Cold as Fed Reacts to Trump’s Skyrocketing Costs

Consumers Are Left Out in the Cold as Fed Reacts to Trump’s Skyrocketing Costs

Working families are desperate for relief from high prices, but don’t have faith they’ll get help soon

This week, despite pressure from the White House, the Federal Reserve paused cuts to interest rates amid clear signs the economy has lost steam. Chairman Jerome Powell cited the fact that inflation still remains higher than the Fed’s 2% target and directly attributed rising costs and stubborn inflation to Trump’s reckless tariff policy.

President Trump today announced that he will nominate Kevin Warsh as the next Chair of the Federal Reserve, a Wall Street favorite with a record of siding with financiers over families. This nomination, which follows the appointment of Trump sycophant Stephan Miran to the Fed Board of Governors, proves that the President is attempting to turn the Fed into a political tool.

During a recent visit to Iowa, President Trump said there’s “[not] one number that’s bad” on his economy. But with layoffs climbing, consumer confidence in free fall, and uncomfortably high inflation, it’s hard to find a single economic indicator that isn’t bad for the White House — or for hardworking families. Consumers have lost faith in Trump to deliver on his promise to lower prices, and it’s costing him. Confidence in the economy has cratered and the White House has no choice but to take their show on the road, a clear sign of their desperation to change the narrative. A national clean-up tour won’t change reality for Americans feeling the squeeze.

This week’s Trump Slump includes plenty of bad numbers for the president:

Economic Indicators on Trump’s Handling of the Economy:

• Consumer confidence collapsed in January. The Conference Board’s Consumer Confidence Index dropped by more than 10% from last month, the lowest level since May 2014. Consumers’ expectations deteriorated across every dimension, from income to business and labor market conditions. Confidence declined across the political spectrum, with the steepest drop among Independents.
  • At the same time, the University of Michigan’s Consumer Sentiment Index has failed to recover since the pandemic for households earning under $50,000, even as it has rebounded for higher-income families earning more than $100,000.
• Inflation pressures are heating up again. The Producer Price Index (PPI) rose 3.0% over the past year in December, above expectations. Services price increases accounted for most of the rise, driven by a 4.5% jump in margins for machinery and equipment wholesaling. Core PPI, which excludes the most volatile categories like food and energy, climbed to 3.3%. This is a warning sign that cost pressures are building upstream, creating ongoing inflationary pressure that consumers ultimately bear.
• Trump’s trade policy is injecting extreme volatility into the economy. The U.S. trade deficit nearly doubled in November to $56.8 billion, the largest month-to-month widening in more than three decades. Such sharp swings disrupt supply chains and business planning, making it harder for firms to invest and hire with confidence. This whiplash reflects Trump’s erratic tariff decisions, which have sent imports, exports, and the trade deficit swinging sharply from month to month. The effective tariff rate now sits near 17%, the highest since 1935, according to The Budget Lab at Yale.
• Cracks in the labor market are impossible to ignore. Federal Reserve Governor Christopher Waller warned today that revisions to last year’s payroll data will “likely show that there was virtually no growth in payroll employment in 2025. Zero. Zip. Nada.” This represents a sharp break from the last ten years, when the economy added nearly 2 million jobs per year.
  • Major employers announced sweeping layoffs this week. Amazon, UPS, Dow, Nike, Home Depot, and other firms announced more than 52,000 job cuts amid economic uncertainty and rising pressure to invest in AI.
  • Just 14% of consumers expect more jobs to be available in January, down from 17.4% last month, according to The Conference Board.
• Families are buckling under debt and inflation. Consumer loan delinquency rate climbed to 2.84% in December, the highest in about a decade. According to Equifax and Moody’s Analytics, missed payments are increasing across nearly all types of debt, including credit cards, student loans, and mortgages. While delinquency rates on consumer loans are rising across the board, they are accelerating the fastest among subprime borrowers, suggesting that low and middle-income households are being hit the hardest.
  • Car loan delinquencies, for example, have climbed nearly 40% over the past three years. More than one in five people face monthly car payments above $1,000, putting added strain on already tight household budgets.
• Health care costs are crushing families. Monthly health insurance bills have surged for middle-income Americans due to Republicans’ failure to extend ACA subsidies. For many families, health insurance premiums have become more expensive than their mortgage. For example, a family of four saw their monthly premiums increase from $300 to $3,300, well over their $2,800 mortgage.
  • A new Kaiser Family Foundation poll found that roughly two-thirds of people say affording health care is their top financial concern, outranking food, housing, utilities, and gas. More than half of people say their health care costs have already gone up, and a majority expect affordability to worsen next year.
  • Three-quarters of all voters, regardless of party, say that health care costs will influence their vote in November. Nearly 80% of independents report that these costs will affect not only whether they vote but also which party’s candidate they choose.
  • Voters trust the Democratic Party more than the Republican Party to manage most health care issues by a 13-point margin.
• Trump is losing support across the board as the economy tanks. Independents, young voters, and working-class households are turning against Trump amid rising prices and economic pessimism. The demographic groups that propelled Trump to the White House in 2024 increasingly regret their votes. Young Americans, lower-income white voters, and independents can see the writing on the wall: the economic relief that Trump promised on the campaign trail is nowhere to be found. Recent polling bears this out, with voters reporting they trust Democrats to handle the economy more than Republicans.
  • A new poll from Fox found that 54% of voters think that the country is worse off now than it was when Trump took office. 70% say Trump is not paying enough attention to the economy, a view shared by nearly half of Republicans. Voters also expect conditions to get worse rather than improve by a 13-point margin.
  • Young voters have lost faith in the president. A recent Wall Street Journal poll found that 58% of voters under 30 now disapprove of Trump’s job performance. Many voters pointed to rising health care prices and Trump’s failure to focus on the economy as reasons for the decline.
  • Trump’s support among independent voters has fallen to a new low across both of his terms in office. According to polling from Economist/YouGov, Only 27% of independents approve of Trump.
  • Voters trust Democrats more than Republicans on economic issues, according to a recent Strength In Numbers/Verasight poll.
    • 43% of voters trust Democrats more on jobs and the economy compared to 40% trusting Republicans.
    • 44% of voters believe Democrats will do a better job at handling prices and inflation than Republicans, while only 37% believe Republicans will do a better job.
    • On health care, the gap is even wider, with 54% trusting Democrats more and only 31% trusting Republicans more.

Expert Commentary:

• “We also know that for some time now, for a year or more, we’ve been hearing from retailers, for example, that serve lower income customers, whether it be food, or the big box stores, or any — they’re saying the same thing, which is, our consumers are looking to economize, they’re trading down from brands and they’re buying less, and changing their buying habits, and that kind of thing. –Federal Reserve Chair Jerome Powell 
• “Confidence collapsed in January, as consumer concerns about both the present situation and expectations for the future deepened … References to prices and inflation, oil and gas prices, and food and grocery prices remained elevated. Mentions of tariffs and trade, politics, and the labor market also rose in January, and references to health/insurance and war edged higher.” –Dana M Peterson, Chief Economist at The Conference Board
• “When I see this number [long-term unemployment rate], I see households under stress. Some people have emergency savings and can stretch them a little bit. But the longer you go, the more likely it is that you don’t have the savings that you need to cover this, and that’s not only bad for those households, it’s bad for the whole economy.” –Cory Stahle, Economist at Indeed
• “There’s been a dramatic narrowing: The folks at the top account for a much higher share of spending than the folks in the bottom 80%, and that gap is widening. It very clearly shows that the economy is dependent on spending by the folks at the top.” –Mark Zandi, Chief Economist at Moody’s Analytics