Trump Slams Fed Chair as Inflation Edges Up and Consumer Spending Slows
US inflation inched slightly higher in May, while consumer spending dipped, prompting President Donald Trump to lash out again at Federal Reserve Chair Jerome Powell for not cutting interest rates.
Speaking at a White House event, Trump called Powell “a stubborn mule and a stupid person,” accusing him of making a critical error. With Powell’s term ending next year, Trump hinted at appointing a successor who would be more aggressive in slashing rates: “I’m going to put somebody that wants to cut rates.”
The Commerce Department reported that the Fed’s preferred inflation gauge — the personal consumption expenditures (PCE) price index — rose 2.3% year-over-year in May, a slight increase from April’s 2.2%. Core inflation, which excludes food and energy, ticked up to 2.7% from 2.6%.
However, consumer spending fell 0.1% month-over-month, reversing gains from April. Analysts attribute the decline to deteriorating consumer sentiment, fueled in part by Trump’s April tariff hikes on major trading partners. Despite these sweeping duties — including on steel, aluminum, and automobiles — inflation effects remain modest, likely due to delayed implementation and pre-tariff stockpiling by businesses.
Fed officials have so far resisted pressure to cut interest rates, opting instead to assess how the tariffs impact the broader economy over the summer. Economists at Pantheon Macroeconomics noted that previous tariffs in 2018 took three to six months to fully impact consumer prices.
Consumer spending on discretionary services, such as travel and hospitality, has also weakened, according to Oxford Economics. Deputy Chief US Economist Michael Pearce said this trend reflects a drop in consumer confidence.
Month-over-month, the PCE price index increased by 0.1% in May.
As a July deadline looms for further tariff hikes, attention turns to whether countries can finalize trade agreements with Washington to stave off additional economic strain. Despite signs of a slowdown, Pearce noted the Fed is likely to maintain its current rate policy until much later in the year due to lingering inflation risks.
