Before his second term, then-former President Donald Trump ran a campaign in 2024 promising to lower the prices of pretty much everything. “When I win, I will immediately bring prices down. Starting on day one,” he said.
And in the months since retaking office, Trump has said, “The economy’s doing great. The stock market’s higher now than when I came to office.” But regular folks — people outside of the administration — aren’t necessarily feeling as great about things.
- Prices as a whole rarely ever go down. When they do, it usually means the economy is in serious trouble.
- When prices rise, it can be confusing, because often other aspects of the economy, such as hiring and wages, may be doing well.
- The president has little power to simply make prices go down on his own.
Electricity prices are up 11% since January. Groceries are up about 2.7% from last year as of September, with items like coffee up almost 21% and ground beef up 11.5% in the past year. And there hasn’t been nationwide relief for housing expenses either.
Trump is showing us all something that former President Joe Biden had already proven: It’s really difficult to lower prices, have a productive economy, and satisfy voters. (Indeed, his approval rating is at the lowest point of his second term, largely driven by costs.) Still, Trump has recently offered some ideas to help out with the cost of living, including a $2,000 check for lower- and middle-income taxpayers and a housing plan that could include 50-year mortgages.
Can the president of the United States really lower prices? Catherine Rampell, the economics editor at the Bulwark and an anchor on MS NOW, says it’s not likely. “The overall price level, so like, in aggregate all of the things across an economy — that basically never comes down,” she told Today, Explained co-host Noel King. “And that’s by design.”
Rampell and King discussed inflation, deflation, the pressure of keeping up with the Joneses, and more. Below is an excerpt of their conversation, edited for length and clarity. There’s much more in the full podcast, so listen to Today, Explained wherever you get podcasts, including Apple Podcasts, Pandora, and Spotify.
Catherine, I am a very cheap American. I pay very careful attention to prices, and I don’t remember prices ever coming down in any significant way in my entire adult life other than during the great financial crisis, where I remember you could, like, get a house for real cheap.
It feels like that is saying something: that maybe prices don’t just come down?
Yeah, that’s pretty much accurate. To be fair, prices of individual things can fluctuate. You mentioned housing when there was a big housing bust. For example, if an oil refinery goes offline, oil prices, gasoline prices might shoot up. And then once that refinery comes back online, the prices might go down.
Same thing for other supply shocks like bird flu: Bird flu happens; all the chickens die. Chicken prices go up; egg prices go up. Once those flocks are replenished, then you start to see prices come back down again.
So it’s not as if there’s no such thing as, like, fluctuation for individual products, particularly really volatile things that are vulnerable to supply shocks like energy and food, but the overall price level — in aggregate, all of the things across an economy — that [number] basically never comes down. You are spending more today than you did a year ago, than you did 10 years ago. than you did 20 years ago.
And yet when politicians are out on the campaign trail, the thing that they will say again and again — no matter what level of office they’re running for is, “I am going to make life more affordable.”
What exactly is the disconnect? Why do we believe a politician who says, “I’m gonna make life more affordable” when we also sort of know that a year from now things will probably be a little more expensive?
I think it’s partly that it’s just not intuitive. People remember life being cheaper. Particularly pre-pandemic life. They remember it being cheaper. And so it seems like a reasonable thing to ask of your public officials, whether elected officials or those at the Federal Reserve, let’s say: Why can’t things go back to the way that they were?
And if you explain to them, well, actually the Federal Reserve is targeting an overall price increase of 2% and not a negative — none of this is obvious to anyone, and that’s reasonable. Most of the time, Americans don’t really care, because price growth is so slow that they have time to adjust, right? If we have a 2% average price increase year over year, which we had for many, many years, it doesn’t feel that painful, particularly since your wages are probably going up by that much or more.
So life feels about as affordable as it did a year before or two years before, or five years before. What’s different recently is that we did have this very sudden surge in inflation in the several years following the pandemic. And so the lower prices that people had recently experienced were still very fresh in people’s memories.
You remember President Biden telling us that the economy was great. That was not true for a lot of people, for millions of people. President Trump says, “Prices in my administration are going down.” That is also not true.
Is the president telling us, “Don’t believe your eyes?” Is that part of what is contributing to Americans being so ticked off about prices?
I assume so. You know, you can lie to the American public about a lot of things. But they see what’s happening in their bank account. They see what’s happening when they get rung up at the grocery store. So I think it is harder to pull the wool over people’s eyes when they are actually paying their own bills.
Now, to be fair, when Biden was saying the economy was good, there were a lot of good things happening in the economy. The job market was really hot. The economy contains multitudes. But people didn’t really care about the fact that there were plentiful jobs to be had, because they had a job and their life was still getting less affordable.
The other thing that I want to flag here is that even as wages were going up and prices were going up [under Biden], I think psychologically people experienced those things differently. When you get a raise, you think it’s because you earned that raise, right? You did something really meritorious at work. Your pay went up because your boss recognized it. Or maybe you even changed jobs, and your pay went up when you changed jobs. And that was due to your own gumption and hard work. Whereas inflation is something that happened to you — that robbed you of the full value of that pay raise. And that’s partly true, but it’s also partly not true in the sense that part of the reason why wages were rising is that employees were demanding higher pay to compensate for higher inflation.
I’m sure that both President Trump and President Biden would’ve liked to bring prices down, right?
Oh yeah.
It would’ve been enormously successful. The question is, can any American president really just overall make life cheaper for us?
There is no dial under the Resolute desk that allows them to turn prices down.
Dang.
Although I’m not sure that they would’ve really wanted to. Because look, when you have prices go down, it has lots of negative consequences too. Or oftentimes, when you do see some very salient price go down, it might be because something else bad is happening in the economy. As an example of this, Donald Trump lately has been promising that he’s going to get gasoline prices down to $2 a gallon again, which would be quite a big decline from where they are today. Do you know the last time gas was $2 a gallon?
No, when?
Oh God. Okay. Don’t wanna do that again.
Exactly. What was going on in spring of 2020? Well, there was a global pandemic. People stopped driving to work. Factories shut down. Businesses of all kinds needed less energy. There was a lot less demand for fuel. And because there was less demand for fuel, that meant fuel was cheaper; gasoline was cheaper.
So if the overall price level is going down — not just one really salient good like gasoline — that often means an economy is very sick. It basically means that everything is on a fire sale. Consumers have stopped spending, and everyone, every business out there is trying to cut their prices to lure consumers back in. And if you are a consumer and you see prices already falling, you don’t want to be the chump who is like, “I’m gonna buy something now only to see it get cheaper tomorrow.”
What happens is this becomes a self-perpetuating cycle. People see prices falling, they hold off on spending, consumer spending grinds to a halt, and prices get lower and lower and lower. This is sometimes called a deflationary spiral. We saw a version of this during the Great Depression. We’ve seen versions of this in Japan, for example, in the ’90s, [and] in Greece during the Greek debt crisis and thereafter.
This is really not a good pattern [that] you want the economy to get into — where prices are falling or even when they’re just imperceptively hovering around 0% growth. That’s why the Federal Reserve is targeting a 2% pace of inflation rather than 0%, or heaven forbid, negative. Because again: If you get into that negative price growth, if prices are actively falling across the board, you can really end up in a dark place economically.
I was reading an article in the New York Times over the weekend, and there was this couple interviewed. They bought a house, their interest rate was high, and they were saying they’ve had to give up vacations and outings and budget more carefully. And I thought, Is that not just life?
Is it not just that we constantly wish we had more money and we don’t? Should we be changing our mindset a little bit around prices and affordability?
You know, different people make different choices about what to do with a fixed amount of money, and it’s very easy to judge other people’s choices. But yeah, we all live within some constraints. That doesn’t mean it’s not reasonable to say, it feels like everybody else is getting ahead and everybody else can afford a home and a vacation, and I can’t. And that’s really frustrating.
But it’s also up to policymakers to ensure that people — aside from side-eyeing their neighbors and feeling poor — that they do feel like they can get the things that we think are the basic needs of humanity.
