New Inflation Data Offers Terrible News for President Donald Trump's Economy and the AI-Driven Bull Market
Trumpflation and Wall Street’s No. 1 catalyst have put the Federal Reserve in quite a bind.
New inflation data signals trouble for President Donald Trump's economy and the AI-powered bull market that has flourished under his leadership. According to the Federal Reserve Bank of Cleveland's Inflation Nowcasting tool, personal consumption expenditures (PCE) inflation rose to 3.6% in September, with forecasts predicting it will climb to 3.77% in October and 3.82% in November.
Core PCE, which excludes volatile food and energy costs, also rose to 3.1% in September, with the tool projecting it to reach 3.2% in October and 3.31% in November.
These figures confirm that inflation is on the rise again, with the Personal Consumption Expenditures Price Index (CPI) and producer price index (PPI) also showing signs of increased inflation. President Trump's policies, including tariffs and the Iran war, have contributed to this upward trend in consumer prices. Tariffs have already added 2.9 percentage points to goods price inflation by February 2026, while the closure of the Strait of Hormuz has led to a significant energy supply disruption, causing gas and diesel prices to reach an all-time high.
While the AI infrastructure build-out has been the leading catalyst for Wall Street's stock market, the rising inflationary pressures pose a threat to this momentum. Fed Chair Kevin Warsh and the Federal Open Market Committee (FOMC) may need to adopt a more aggressive stance on interest rate hikes to bring inflation under control. However, the longer-term effects of Trumpflation suggest that this challenge may persist, potentially impacting the stock market's performance.
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