Inflation Soars to 3.6% as Trump Touts His Big Oil Fortune
Inflation Soars to 3.6% as Trump Touts His Big Oil Fortune
Fragile GDP growth fails to counter rising inflation, high gas prices, shrinking paychecks; Trump says “I don’t give a damn”
Today’s Personal Consumption Expenditure (PCE) report from the Bureau of Economic Analysis (BEA) shows that PCE prices rose 0.5% in September and 3.6% over the past year. The BEA also released its advanced estimate of third-quarter real GDP, which shows the economy grew at an annualized rate of 3.4%. Overall, the economy has averaged 2.7% growth in 2026, below the 3.0% rate the year before Trump took office.
Less than a week before the midterm elections, Trump is bragging about the money oil companies are making while families pay more at the pump and at the checkout line. At a rally in Georgia on Saturday, Trump said “I don’t give a damn. We’re making a freaking fortune,” in reference to high oil prices. Meanwhile, Americans are paying an average of $4.23 per gallon for gas, up 39% from a year ago, and $6.33 for diesel, up 72% from a year ago while inflation outpaces wage growth.
Groundwork’s Senior Vice President of Policy, Advocacy, and Research Alex Jacquez released the following statement:
“Inflation remains high, working families are paying $4.23 at the pump, and meager pay raises aren’t keeping up with rising prices. Instead of focusing on delivering lower prices, Trump is touting Big Oil’s Iran war windfall. Skyrocketing prices and economic growth largely driven by AI spending do not add up to an economy that works for working families.”
Background
Trump’s war and tariffs are leaving families with higher bills.
- PCE prices rose 0.5% in September and 3.6% over the past year. Core PCE, the Fed’s preferred measure of inflation, increased 0.3% in September and 3.1% over the past year, well above the Fed’s 2% target.
- Trump’s war with Iran continues to drive up energy prices. Prices for gasoline and other energy goods rose 9.2% in September alone and 35.4% over the past year as Trump’s war continues to squeeze global oil supply.
- Home heating will cost more this winter. Households that primarily use heating oil for their homes can expect to spend roughly $2,115 this winter, a 21% increase from last year. These are mainly homes in the Northwest, including Maine, New Hampshire, and Vermont.
- Trump’s tariffs are also driving up prices for goods made in the U.S. His tariffs have raised consumer goods prices by nearly 3%, with about one-third of the effect coming from higher prices for goods made in America, according to the Federal Reserve Bank of New York.
- Higher interest rates mean working families are paying more to borrow. The Federal Reserve held rates yesterday at 3.75% to 4.00%, with mortgage rates above 7% and credit card interest rates above 22%.
Pay raises are not keeping up with inflation.
- Inflation continues to outpace income gains. Disposable personal income rose 0.2% in September, while prices increased 0.5%. After accounting for inflation, real disposable personal income fell 0.3% in September.
- BLS’ real earnings report also shows how inflation is eroding pay raises. Average hourly earnings rose just 3.0% from a year ago, the slowest pace since 2021, while consumer prices rose 3.7%. Consumers have now faced six consecutive months of a real hourly earnings decline.
- Families have less room to save. The personal saving rate fell to 3.8% in September, the lowest since October 2022 and well below the average of 6.3% in 2024, before Trump took office.
GDP growth is largely driven by AI spending and is more fragile than the headline suggests.
- AI spending is propping up economic growth. Business investment in equipment and intellectual property, partially capturing some spending on chips, software, and computers for data centers, drove 47.9% of GDP growth in the third quarter of 2026, following 57% in the second quarter and two-thirds in the first. Businesses stockpiling inventories also drove GDP growth by 1.6 points in the third quarter.
- Growth is uneven across the rest of the economy. Residential investment fell at an annualized rate of 3.3% in the third quarter, down from a 2.8% rise last quarter. Investment in new factories has fallen to an annualized rate of 15%, down from 24% from a year ago, a sign of Trump’s failed promise that tariffs would bring manufacturing back.
