Source:  Federal Reserve Bank of St. Louis, Inflation, consumer prices for United States, https://fred.stlouisfed.org/series/CPIAUCSL#

The US experienced severe price spikes in the distant past - including the 1970's and early 1980's. Rapidly rising oil prices were a major cause.

Since the mid-1980’s, inflation has remained relatively stable, averaging 2.6% between 1985 and 2020. For most Americans, that is their memory of inflation - relatively steady and mild. And that is why the spike during COVID was such a shock.

Beginning in mid-2021, inflation spiked up, reaching over 8% year-over-year in 2022.   There were several reasons for this (1), including:

1. Both the Trump and Biden administrations implemented large subsidy payments to US households, to offset the economic losses caused by the pandemic.  This helped to support the US economy, but it also put a large amount of money into the economy, spurring inflation.

2. Supply chain disruptions, caused by the pandemic, and

3. The Russian invasion of Ukraine, which caused oil prices to go up.

In general, these factors affected all countries, not just the US. According to the World Bank, the US had 8% consumer inflation in 2022, very similar to the average of other large, advanced countries (7.4%). Seven of these countries, or about half, had 2022 inflation rates higher than the US. (2)

Although US inflation quickly returned to levels similar to the long run average, the cumulative effect of this high inflation in 2022 and early 2023 is still with us - consumers feel (correctly) that prices are now much higher than they were just a few years ago. This is why inflation and affordability remain top issues for voters.

Inflation is a serious problem for many reasons: It reduces families' purchasing power, it affects lower income households the hardest, it creates business uncertainty, and it increases costs for businesses. (3)

As a result, voters are rightly concerned about inflation.  A poll by UT Tyler's Polling Center in June 2025 found that Inflation was the number one policy concern for Texas voters overall. (4)

What is the Trump Administration doing and how is that increasing the risk of inflation?

During the 2024 campaign, Trump promised repeatedly to eliminate inflation. (5)

However, Trump has focused very little attention on inflation, and inflation has stayed well above the Federal Reserve's 2% target so far in Trump's second term. Inflation hasn't gone down.

Many of Trump’s policies threaten to increase inflation even more.

• Tariffs - Trump has imposed high tariffs on most of our trading partners. Tariffs are a tax on consumers, because they are paid for by importers, who then often pass the costs onto consumers. This obviously raises prices. (6)

• The harsh immigration crackdown - Trump's harsh crackdown on undocumented immigrants, including many people who have been in the US for a long time and are here legally, is disrupting labor supply.  This can lead to inflation by reducing the supply of goods, and by forcing businesses to pay higher wages to meet labor shortfalls. (7)

• Large Deficits - the Federal government is running large budget deficits, and the Trump administration’s actions are accelerating those deficits. For example, Trump's Big Beautiful Bill is projected to add over $3 trillion to the deficit. Deficits increase the risk of inflation by putting more money into the economy. (8)

• The Iran War - the war is pushing up oil prices, which affects inflation directly through higher gas and energy prices, and indirectly because it increases costs for business, manufacturing and transportation. The war is also pushing up the price of fertilizer, which will translate into higher food prices. (9)

So, what are Smart Policies to effectively manage inflation?

1. End the harmful tariffs. Tariffs can be an effective policy if they are used strategically, but Trump has applied them broadly and arbitrarily. This just increases prices to US consumers. (10)

2. Address affordable housing - because housing is a large part of household budgets and because the cost of housing has risen sharply in recent years, housing is a major driver of inflation. (11)

3. Address the deficit - end the tax breaks for the wealthy - The Economic Policy Institute points out "Expanding public investment and raising federal revenue via taxes that mostly come from high-income households is the most optimal way to close fiscal gap, boost economic productivity, and produce a fairer economy." (12) 

4. Invest in productivity and workforce development - a stronger, more productive workforce increases the supply of goods, which can help to reduce inflation and helps to build a stronger middle class. (13)

Bottom line: High inflation and affordability are valid concerns for US households. Trump administration actions are keeping inflation relatively high and are increasing the risk of accelerating inflation in the future.

We need to elect leaders who will take responsible action to reduce inflation.

Sources: 

1. National Bureau of Economic Research, "Unpacking the Causes of Pandemic-Era Inflation in the US", 9/1/23, https://www.nber.org/digest/20239/unpacking-causes-pandemic-era-inflation-us

2. World Bank Group, https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG

3. Stanford Institute for Economic Policy Research, March 2024, https://siepr.stanford.edu/publications/policy-brief/who-most-affected-inflation-considersource

4. UT/Tyler - May/June 2025 - https://www.uttyler.edu/academics/colleges-schools/artssciences/departments/political-science/files/uttyler-poll-202505-corrected.pdf

5. CBS news, 1/20/25, https://www.cbsnews.com/news/transcript-trump-inauguration-speech2025/

6. Federal Reserve Bank of San Francisco, 5/19/25, https://www.frbsf.org/research-andinsights/publications/economic-letter/2025/05/effects-of-tariffs-on-inflation-and-productioncosts/#:~:text=Tariffs%20over%20time%20Tariffs%20are%20a%20tax,overall%20inflation%20fa ced%20by%20consumers%20and%20businesses.

7. Fortune, 8/16/25, https://fortune.com/2025/08/16/trump-deportation-immigration-inflation2026/

8. The Budget Lab at Yale, 3/12/25, https://budgetlab.yale.edu/research/inflationary-risks-rising-federal-deficits-and-debt

9. Fox Business, 3/26/26, https://www.foxbusiness.com/economy/iran-war-could-push-inflation-higher-year-goldman-sachs-says

10. CNBC, 8/14/25, https://www.cnbc.com/2025/08/14/cnbc-daily-open-economists-think-tariffswill-cause-inflation-soon.html

11. Bankrate, 8/12/25, https://www.bankrate.com/real-estate/inflation-housing-market/

12. Economic Policy Institute, 2/13/25, https://www.epi.org/publication/tcja-extensions-2025/

13. Center for American Progress,https://www.americanprogress.org/article/investing-in-workerscan-further-ease-inflation-and-boost-economic-growth/