Jump in inflation expectations bad news for Trump, the Fed, and all Americans

A closely watched survey showed a big increase in consumer expectations for inflation, which is unwelcome news for the Federal Reserve and President Donald Trump. After all, the central bank has worked for years to curb price spikes, and Trump, in 2024, won a second, nonconsecutive term campaigning heavily on lowering inflation.

The University of Michigan Consumer Sentiment Index for February indicated that consumers expect prices to stay high, at least to some degree. After nearly a half-decade of price hikes spurred by the COVID-19 pandemic, consumers expect inflation to climb at an annual rate of 3.5% over the next five to 10 years. That is well above the Fed’s preferred 2% level and is the highest such expected rate since 1995.