Trump can't bring prices down

Speaker 1 There are some real signs that President Trump and his economic advisors are starting to freak out over our freak out over the cost of living.

Speaker 1 First, there was the unprompted lie told during a cabinet meeting in late August.

Speaker 2 Groceries are down.

Speaker 2 Energy is way down. Energy is way down.
Eggs are way down. Thank you very much.
When we came in, the eggs were through the roof. They were four times.
That was caused by Biden or whoever

Speaker 2 was operating the autopen.

Speaker 1 Actually, then came the Dodge.

Speaker 2 The reason I don't want to talk about affordability is because everybody knows that it's far less expensive under Trump than it was under Sleepy Joe Biden.

Speaker 1 Then he started talking about cutting you a check.

Speaker 2 We're going to issue a dividend to

Speaker 1 and then on Friday, Trump removed or lowered tariffs on more than 200 foods, including beef, coffee, tomatoes, and bananas.

Speaker 1 Ahead on today explained: President Trump got elected in part because he promised to lower prices.

Speaker 3 What happens if he can't?

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Speaker 3 This is Today Explained.

Speaker 1 I'm Noelle King. Victoria Guida is here.
She's an economics correspondent for Politico. So, owing to inflation, prices were a big talking point during last year's presidential campaign.

Speaker 1 Trump and Kamala Harris both made a lot of promises.

Speaker 3 Both of them were talking about ways to bring down prices, and President Trump actually said that he would bring down the price of everything.

Speaker 6 So, when I win, I will immediately bring prices down starting on day one.

Speaker 2 I will end the devastating inflation crisis immediately, bring down interest rates, and lower the cost of energy.

Speaker 3 And Kamala Harris, his opponent, was talking about building an opportunity economy.

Speaker 7 An opportunity economy where everyone has the chance to compete and a chance to succeed.

Speaker 3 Where she was basically trying to chart a path out of this very high cost of living.

Speaker 1 Ultimately, it seems like voters decided they believed Donald Trump more. Why do you think that is? Why did people think he's going to be the one to bring prices down?

Speaker 3 So under his first term, inflation was pretty low. And so I think people remembered that.
The economy was actually quite good. And the Biden years were very turbulent.

Speaker 3 And, you know, not all of that was his fault. A lot of that was coming out of the pandemic.
and people felt sort of whiplashed. And so they were sort of looking to that pre-pandemic period.

Speaker 3 And then, you know, President Trump is also affiliated with business, right? He's a business guy. He's a real estate guy.

Speaker 3 And so they wanted somebody who, you know, seemed like he knew what he was doing.

Speaker 1 In January, President Trump takes office. And I think the assumption among a lot of people was he's going to get started right away.
What actually did happen beginning in January?

Speaker 3 So on the economic side, the big thing that he did pretty early was the tariffs.

Speaker 2 Starting tomorrow, the United States will implement reciprocal tariffs on other nations.

Speaker 2 It's been a long time since we even thought of that.

Speaker 3 Which is interesting because he actually did run on tariffs, right?

Speaker 3 And it was sort of alongside this idea that he was going to bring down prices, even though those things are not totally consistent, right?

Speaker 3 Like the point of tariffs is, you know, maybe you're more willing to deal with higher prices because you want to bring back jobs.

Speaker 3 And so he put a bunch of tariffs in place, and and that has pushed up the prices of some things.

Speaker 1 I think in the American economy, there are like a couple of big line items in everybody's budget.

Speaker 1 And maybe the first one we could talk about is energy and gas, people's electricity bills, people's gas bills. What has happened with prices there in the second Trump term?

Speaker 3 So there's a couple of different stories.

Speaker 3 So electricity costs have gone up a lot.

Speaker 9 It is getting increasingly expensive just to keep the lights on. The state of Maine, you're looking at a 26% increase in residential electricity prices.

Speaker 3 Millions of New Jersey households could see a rate hike ranging anywhere from roughly 17 to 20 percent. Economists are saying electricity prices are climbing more than twice as fast as inflation is.

Speaker 3 And that varies a little bit depending on where you are in the country.

Speaker 3 There's a whole bunch of different things that contributes to that, like the fact that the electrical grid is aging and it's expensive to upkeep and things like that.

Speaker 3 But also, I mean, one thing that you do hear people point to that's a policy thing is that President Trump has also been very opposed to green energy. We will drill, baby, drill.

Speaker 11 We will not allow a windmill to be built in the United States.

Speaker 2 They're killing us. And we don't want the solar panels that I'm speaking with the Secretary about because they take up thousands of acres of our farmland.

Speaker 3 Whereas, you know, what you hear from a lot of businesses is, you know, we want a kind of all of the above approach, right?

Speaker 3 Like President Trump wants to be more pro-fossil fuel than Biden was, which, you know, businesses love, but it's also kind of like, but we kind of need energy wherever we can get it.

Speaker 3 In terms of gas prices, it's roughly where it was a year ago, but I will say gas prices over the course of this year have actually been a bit lower than they were last year.

Speaker 1 The next big line item for a lot of people is going to be groceries. And here, President Trump has been very interesting because he has talked about groceries.
It's not like he's ignoring them.

Speaker 1 Groceries.

Speaker 2 It's a very simple word, groceries. It's such an old-fashioned term, but a beautiful term, groceries.
It sort of says a bag with different things in it.

Speaker 2 The word grocery, you know, it's sort of simple word, but it sort of means like everything you eat.

Speaker 1 What has happened with the price of groceries since January?

Speaker 3 So the price of groceries have gone up.

Speaker 1 Prices for roasted coffee rising almost 21% in the past year.

Speaker 9 Round beef is up 11.5%.

Speaker 3 Eggs still higher than a year ago. Apples, bananas, just about everything you can think of is rising here.
We've continued to see prices go up.

Speaker 3 And again, with the tariffs, that's the type of thing where we're actually seeing President Trump over the last, just in the just in recent days, starting to soften on these tariffs that are on food products, which is, you know, maybe an implicit acknowledgement that these are pushing up the prices.

Speaker 3 I mean, I think it is sort of like a gentle acknowledgement that lowering tariffs on things like coffee and bananas will make those things cheaper for consumers.

Speaker 1 And then the last big one would be housing. Is rent cheaper? Are mortgages, are people paying less on their mortgages since January?

Speaker 3 Rent is still rising, to answer your question. But I will say that it is actually rising a lot more slowly.
than it had been.

Speaker 3 And part of the reason is because you've seen actually at the state and local level a lot of moves to build more housing. And that's been helping.
In terms of mortgages, absolutely not.

Speaker 3 I mean, interest rates are high and the Federal Reserve has actually cut interest rates a bit.

Speaker 3 The problem is that when you have mortgage rates come down a little bit, what happens is more people want to buy houses, which when you don't have enough housing just pushes up the cost of houses.

Speaker 3 So housing overall is still

Speaker 3 very expensive.

Speaker 1 Okay, so your average American is not unaware that prices mostly are going up and not coming down. Your average American voted for Donald Trump.

Speaker 1 How has Trump reacted to the criticism that he hasn't managed to do what he said he was going to do?

Speaker 3 So initially, his message was, you know, the economy is great.

Speaker 11 The economy is doing great. The stock market's higher now than when I came to office.

Speaker 3 We have no inflation.

Speaker 2 The biggest thing is inflation, and it's way down.

Speaker 3 Everything's going really well.

Speaker 2 We have the greatest economy right now. A lot of people don't see that.

Speaker 3 Tariffs are not pushing up prices, although he was a little bit squishy on that one.

Speaker 11 Tariffs don't cause inflation, they cause success, cause big success. So we're going to have great success.
There could be some temporary short-term disruption, and people will understand that.

Speaker 3 But he was really upbeat on how the economy was doing. And then we just had an election earlier this month.

Speaker 3 It was an off-year election, but the results were really striking, where the Democrats did really well in Virginia, New Jersey, in New York City.

Speaker 3 We saw Zaran Mamdani win the mayoral race on affordability issues. And so it seems like since then, he's sort of softened his tone.

Speaker 3 I mean, he's still making the argument that, you know, basically they've addressed inflation, but he's also been putting out a lot of ideas of ways that, you know, that they can bring down the cost of living.

Speaker 3 On Friday, President Trump signed an executive order.

Speaker 10 This order exempts hundreds of products from the president's so-called reciprocal tariffs, a move aimed at lowering grocery prices.

Speaker 2 We're going to have some little price reductions, and in some cases some pretty good ones.

Speaker 3 And also softening a little bit, as I mentioned earlier, on sort of tariffs on things like food.

Speaker 1 What are some of the ideas to bring down the cost of living? What are we hearing specifically from the White House?

Speaker 3 So one of the ideas that he put out there was the idea of a 50-year mortgage.

Speaker 3 That is something that it's it's unclear whether that's actually something they're gonna move forward with there seems to be skepticism even within the White House about this idea.

Speaker 1 Is that because it's just such a patently bad idea?

Speaker 3 Well, I don't know that it's that it's like particularly bad. It just wouldn't really help anything.

Speaker 3 You know, the idea of a 50-year mortgage is you have lower monthly payments, but you probably will pay a higher interest rate.

Speaker 3 And the real problem is the way that mortgages are structured, even like a 30-year mortgage, right, is you pay much higher interest in the early years than you do principal.

Speaker 3 So you're not actually getting equity, getting an ownership, like a bigger, bigger ownership stake until you get well into the mortgage.

Speaker 3 And so if you have a 50-year mortgage, that's going to push that out even more.

Speaker 3 And so it's kind of like, you know, you might be getting like a little bit of ownership year after year, but at a certain point, it becomes like a little bit indistinguishable from just paying rent.

Speaker 1 The president, in his first term, he had a lot of success with the American people during the pandemic, cutting checks.

Speaker 3 So he's talked recently about this idea of a tariff dividend, is what he's calling it,

Speaker 3 which I believe where that stands is something like $2,000 checks for people making under $100,000.

Speaker 2 We're going to issue a dividend to our middle-income people and lower income people of about $2,000.

Speaker 9 No, no, not for this year. It'll be next year.

Speaker 3 Not a great time for that, given that inflation is still higher than where we want it to be.

Speaker 3 And you might remember that actually one of the things that people blame for the fact that we had such high inflation under Biden was the fact that they continued to send out these checks even after the economy was strengthening.

Speaker 3 And that probably allowed inflation to go a bit higher than it would have.

Speaker 1 How are people responding to the fact that, you know, these big promises haven't been met?

Speaker 3 On the economy specifically, his numbers have plummeted.

Speaker 8 On ratings for handling the economy, handling inflation, the president's ratings have been ticking down for the course of his term and continue to do so.

Speaker 3 More than six in ten disapprove of how he's handled tariffs, the economy, and the federal government.

Speaker 12 Trump is at his lowest approval rating yet, which is 39% of Americans approving of his job as president.

Speaker 3 And so you really have seen people have increased skepticism. Now,

Speaker 3 who knows what that will actually mean, right? President Trump is somebody who seems to

Speaker 3 engender loyalty in all sorts of circumstances, but it does seem like people are really noticing.

Speaker 3 And again, that's why the election earlier this month, I think, sort of spooked them a little bit because it might be a sign of what's to come for the Republicans in the midterm elections next year.

Speaker 1 Victoria Guida covers economics for Politico. Coming up, can any politician really bring prices down?

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Speaker 1 What do you think today explained this?

Speaker 3 I don't know.

Speaker 13 Catherine Rampell. I'm the economics editor at the Bulwark, and I'm also an anchor at MS Now, formerly known as MSNBC.

Speaker 1 Catherine, I am a very cheap American.

Speaker 1 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 you could like get a house for real cheap.

Speaker 1 It feels like that is saying something that maybe prices don't just come down.

Speaker 13 Yeah, that's pretty much accurate.

Speaker 13 To be fair, prices of individual things can fluctuate. You mentioned housing when there was a big housing bust, for example.

Speaker 13 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.

Speaker 13 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.

Speaker 13 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.

Speaker 13 But the overall price level, so like in aggregate, all of the things across an economy, that basically

Speaker 13 never comes down.

Speaker 13 You are spending more today than you did a year ago, than you did 10 years ago, than you did 20 years ago.

Speaker 1 And yet, when politicians are out on the campaign trail, the thing that they will say again and again, kind of no matter what level of office they're running from, is, I am going to make life more affordable.

Speaker 6 So, when I win, I will immediately bring prices down starting on on day one.

Speaker 7 And when I am president, I will bring down the cost of groceries.

Speaker 1 What exactly is the disconnect?

Speaker 1 Why do we believe a politician who says, I'm going to make life more affordable, when we also sort of know a year from now, things will probably be a little more expensive.

Speaker 13 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.

Speaker 13 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, that why can't things go back to the way that they were?

Speaker 13 And if you explain to them, well, actually, the Federal Reserve is targeting an overall price increase of 2% and not a negative, like none of this is like obvious to anyone. And

Speaker 13 that's reasonable. And most of the time, Americans don't really care because price growth is so slow

Speaker 13 that they have time to adjust, right? If we have a 2%

Speaker 13 average price increase year over year, which we had for many, many years, you know, it doesn't feel that painful, particularly since your wages are probably going up by that much or more.

Speaker 13 So life feels about as affordable as it did a year before or two years before or five years before.

Speaker 13 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

Speaker 13 people had recently experienced were still very fresh in people's memories.

Speaker 1 You remember President Biden telling us that the economy was great?

Speaker 14 We have the strongest economy in the world.

Speaker 14 Let me say it again, in the world.

Speaker 1 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.

Speaker 1 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?

Speaker 13 I assume so.

Speaker 13 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.

Speaker 13 So I think it is harder to pull the wool over people's eyes when they are actually paying their own bills.

Speaker 13 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.

Speaker 13 So, you know, the economy contains multitudes, if you will.

Speaker 13 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.

Speaker 13 And the other thing that I I want to flag here is that even as wages were going up and prices were going up, I think psychologically people experience those things differently.

Speaker 13 When you get a raise, you think it's because

Speaker 13 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.

Speaker 13 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.

Speaker 13 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.

Speaker 1 I'm sure that both President Trump and President Biden would have liked to bring prices down, right? It would have been enormously successful. The question is,

Speaker 1 can any American president really just overall make life cheaper for us?

Speaker 13 There is no dial under the resolute desk

Speaker 13 that allows them to turn prices down.

Speaker 13 Although I'm not sure that they would have really wanted to, because

Speaker 13 look, when you have prices go down, it has lots of negative consequences too.

Speaker 13 Or oftentimes when you do see some very salient price go down, it might be because something else bad is happening in the economy.

Speaker 13 So just 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,

Speaker 13 which would be quite a big decline from where they are today. Do you know the last time gas was $2 a gallon?

Speaker 1 No.

Speaker 13 When? It was in spring of 2020.

Speaker 1 Oh, God. Okay.

Speaker 13 What else was going on?

Speaker 1 Don't want to do that again. Exactly.

Speaker 13 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.

Speaker 13 There was a lot less demand for fuel. And because there was less demand for fuel, that meant fuel was cheaper.
Gasoline was cheaper.

Speaker 13 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.

Speaker 13 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.

Speaker 13 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 going to buy something now only to see it get cheaper tomorrow.

Speaker 13 So 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.

Speaker 13 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,

Speaker 13 in the 90s, in Greece, during the Greek debt crisis, and thereafter.

Speaker 13 So, this is really not a good pattern you want the economy to get into where prices are falling or even when they're like just imperceptibly hovering around 0% growth.

Speaker 13 So, that's why the Federal Reserve is targeting a 2%

Speaker 13 pace of inflation rather than 0% or heaven forbid, negative.

Speaker 13 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.

Speaker 1 I was reading an article in the New York Times over the weekend, and there was this couple interviewed.

Speaker 1 They bought a house, their interest rate was high, and they were saying we've had to give up vacations and outings and budget more carefully. And I thought,

Speaker 1 is that not just life?

Speaker 1 Is it not just

Speaker 1 we constantly wish we had more money and we don't? And should we maybe be changing our mindset a little bit when it comes to the question of prices and affordability?

Speaker 13 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.

Speaker 13 That doesn't mean it's not reasonable to say,

Speaker 13 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.

Speaker 13 But it's also up to policymakers to ensure that people, you know, aside from like, you know, side-eyeing their neighbors and feeling poor and whatnot, that they do feel like

Speaker 13 they can get the things that we think are the basic needs of humanity. Healthcare, food, you know,

Speaker 13 the ability to put clothes on their kids. So, you know, I think there are different ways to look at this.

Speaker 1 Catherine Rampell of The Bulwark and MS Now. Hadi Muagdi produced today's show, Jolie Myers Edited.
Patrick Boyd and Adrian Lilly Engineered. Ariana Esputu and Melissa Hirsch.
Check the facts.

Speaker 1 Vox.com/slash members. If you want to take advantage of our membership sale, I'm Noel King.
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