Inflation Debate: Treasury Department and President Trump Have Different Views
Conflicting Statements
The Treasury Department and President Donald Trump have expressed differing opinions on the current state of inflation in the economy. The Treasury Department stated that inflation “remained above the target of 2 percent in the third quarter,” while President Trump claimed on CBS News’ 60 Minutes that there was “no inflation.”
Inflationary Trends
According to the Treasury Department, as of September 2025, inflation, measured by the headline consumer price index (CPI), was 3% on a 12-month basis. The department attributed the elevated annual growth to strong price pressures from September 2024 to January 2025, during which headline CPI rose by 4.1% at an annualized rate. From January 2025 to September 2025, CPI growth was more moderate at 2.5% at an annual rate.
Energy Goods and Services
The Treasury Department reported that CPI inflation for energy goods and services picked up in the third quarter to an average 0.4% per month, after rising an average 0.2% per month in the second quarter.
Rent of Housing Services
Inflation for rent of housing services, including rent of primary residence and owners’ equivalent rent, averaged 0.3% per month in the third quarter. Over the year through September 2025, rent of housing inflation was 3.7%, the slowest annual pace since December 2021.
Housing Sector Softness
Treasury Secretary Scott Bessent noted in an interview on CNN’s State of the Union that the housing sector is experiencing softness. Bessent suggested that if the Fed brings down mortgage rates, it could help end the housing recession. Although mortgage rates have dropped over the past few months, the overall housing market remains weak.
Deficit Reduction and Inflation
Bessent stated that the Trump administration has worked to lower the deficit-to-gross-domestic-product ratio from 6.4% to 5.9% through government spending cuts, which should help push down inflation. However, core inflation remains above the Fed’s stated target of 2%. According to the Treasury Department, monthly core CPI inflation averaged 0.3% in the third quarter, with an annual core inflation rate of 3%.
Market Perspective
Charles Urquhart, Founder and CEO of Fixed Income Resources, commented that the Treasury’s report is in line with what the bond market has been indicating for months: inflation may have decreased from its peaks but is stabilizing at a higher level than desired. Urquhart noted that with wage increases near 4% and continued pressure in the service economy, the Fed is still cautious, and long yields haven’t retraced down with policy cuts.
Conclusion
The disagreement between the Treasury Department and President Trump on the current state of inflation highlights the complexities of the economy. While the Treasury Department reports that inflation remains above the target rate, President Trump claims there is no inflation. As the economy continues to evolve, it is essential to monitor inflation trends and their impact on the housing sector, deficit reduction, and the overall market.
