The Bureau of Labor Statistics released its Consumer Price Index for the month of January, and it showed annualized inflation dropping to 2.4 percent for the 12 months ending in January, down from 2.7 percent for the 12 months ending in December.
The press wrote it up as if it were a big surprise. A New York Times subheadline described inflation easing “by more than expected”. “Prices Rise Slower Than Expected,” said a Bloomberg headline. Yet a lot of people who have been paying careful attention—including Treasury Secretary Bessent and President Donald Trump—have been saying for months that inflation is cooling.
Scott Grannis, the Calafia Beach Pundit, said it back in September 2025: “[T]here is little or no reason to worry that inflation is coming back to haunt us.” I said it back in August: “Rent Prices Fall, in Sign Inflation Is Receding.”
Grannis wrote on Jan. 28, 2026, that “inflation has remained relatively low … The monetary and inflation fundamentals are pretty darn good these days.”
Truflation, a private sector data collector and provider, posted on Jan. 28, 2026: “Truflation US CPI today: 1.16% Y/Y … The categories with the most consistent downtrends in January are Food and Housing, but we also see cooling in household items that had previously been rising due to tariffs, as well as in gasoline, clothing, and communications (cellular phone services).”
Friday’s inflation numbers were so good that even former Obama and Biden administration officials acknowledged it. The chair of former president Biden’s Council of Economic Advisers, Jared Bernstein, described it as “a welcomely benign inflation report.” Bernstein wrote that “generally speaking, it’s a good inflation report … if broad inflation pressures were building, we’d see that in the data, and, as of now, we do not.”
The chair of former president Obama’s Council of Economic Advisers, Jason Furman, who teaches at Harvard University, a hotbed of anti-Trump resistance, wrote “Bottom line: This is reassuring on inflation.”
The White House also celebrated, posting to X: “Big news: Inflation at its lowest in almost 5 years, gas cheaper at the pump – and there is more to come!”
So what accounts for reactions like the New York Times headline about inflation easing “by more than expected”? The Times news article by its Fed reporter Colby Smith says, “Overall inflation unexpectedly eased.” Unexpectedly, huh?
Or how might one explain the Bloomberg headline about prices rising “slower than expected”?
One set of “expectations” are surveys of economists, but as Trump justifiably delights in pointing out, the economists have been consistently wrong, starting with the recommendation by many of them that Biden could go on a spending binge without igniting persistent inflation. And onward: See, for example, the June 2024 CNN headline, “Trump would make America’s inflation crisis worse, 16 Nobel economists warn.” Of those 16 economists, 4 also signed a letter denouncing Israel’s treatment of Gaza as “unconscionable” and complaining about “spreading starvation.” One of those economists, Claudia Goldin, who signed both letters, also was recently honored by Harvard president Alan Garber with a promotion to Harvard’s highest faculty distinction, the title of University Professor.
At a certain point, it would probably make sense to quit paying attention to these economist predictions as anything other than a contrary indicator, and to stop treating it as a “surprise” when they get it wrong.
Yet there’s another set of “expectations” at play, and those are partisan political ones. Surveys have shown a stark partisan split in inflation expectations. There’s a chart from Apollo’s Torsten Slok back in January 2025 that illustrates how the expectations changed after the election results.
And Gallup data from Jan. 2 to Jan. 17, 2026, showed 86 percent of Democrats expecting higher inflation, but only 26 percent of Republicans. The same survey showed 59 percent of Republicans expecting lower inflation, but only 7 percent of Democrats. That’s also a useful explanatory framework for understanding the press reaction.
As for the Federal Reserve chairman, Jerome Powell, whom Trump has criticized as “too late” to cut interest rates in response to the lower inflation readings, you can already see how this is headed in the direction of Powell claiming credit for vanquishing inflation, with strong private sector job creation numbers meaning the Fed had the right policy. Yet it’s possible also that private sector job creation might be even stronger, and inflation even lower, with lower rates, which Trump has been pushing for.
Trump has chosen Kevin Warsh to replace Powell as Federal Reserve chairman, but Warsh will have to navigate confirmation amid a Senate that has been carefully cultivated by Powell and includes Republican Thom Tillis of North Carolina, who is not running for reelection. Tillis has demanded that the Trump administration drop its criminal probe of the Fed’s $2.5 billion headquarters renovation, and of Powell’s congressional testimony about it, before any vote on confirming Warsh.
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