Who's Really Responsible for the Inflation Surge?

Economist Peter Schiff isn't buying President Donald Trump's version of the inflation story. In a post on X Wednesday, Schiff called Trump's claims that record-high inflation was caused by former President Joe Biden and congressional Democrats flat-out "false."

Here's Schiff's take: The 9.1% year-over-year inflation recorded in June 2022 actually came from fiscal and monetary policies enacted before Biden even stepped into the Oval Office. Specifically, Schiff points to "Fed-financed deficit spending passed by a Republican Congress and signed by Trump" as the real culprit.

That said, Schiff doesn't give Democrats a free pass either. He acknowledged that Biden-era policies added fuel to the fire, saying plainly, "Democrats just made it worse."

The Numbers Don't Match Trump's Narrative

Trump has been on a victory lap about his administration's handling of inflation, claiming he inherited an economic disaster from Biden that he's now "fixing." But Democratic strategist Jessica Tarlov calls this narrative a "lie," noting that Trump's figures "don't match real life."

The problem? Trump's preferred inflation metric conveniently excludes essentials like food, rent, and healthcare, focusing instead on cheaper gas prices. Tarlov also points out a crucial fact: Biden left office with inflation at 2.9%, not the 9% figure Trump repeatedly claims he inherited.

Economist Justin Wolfers adds another wrinkle to the story. He says Trump created unrealistic expectations by promising actual price drops during his campaign last year. In a healthy economy, Wolfers notes, "they almost never do." The typical pattern after surging prices isn't deflation but wage growth, which isn't happening right now, creating what he calls an "affordability crisis."

What the Fed Is Saying

There's some good news on the horizon, though. Top Federal Reserve officials recently reached a rare consensus on inflation expectations. New York Fed President John Williams and Fed Governor Stephen Miran both expect inflationary pressures to ease going forward.

Williams, a key ally of Fed Chair Jerome Powell, also offered reassurance about Trump's tariffs, saying their impact on inflation will be "more muted and drawn out" than many feared.

The Tale of Two Administrations

So what do the actual numbers show? During Trump's first term, average year-over-year inflation stood at 2.46%, according to Investopedia. Under Biden, that average jumped to 4.95%.

The reasons for Biden's higher average are well-documented: a $1.9 trillion stimulus package aimed at helping the economy recover from the COVID-19 pandemic, plus surging gas prices following Russia's invasion of Ukraine. Whether you think those policies were necessary or reckless depends largely on your political perspective, but the numbers themselves aren't in dispute.