Thus far, consumers have only paid a fairly small fraction of the Trump tariffs. As a result, while inflation has remained stubbornly high, it has not spiked. Surveys indicate that many companies which held the line on prices as long as possible intend to increase them in the future, however. What does that portend for 2026?
Instead of a spike, we will see increased inflation for a longer period of time. This will create higher inflation expectations among consumers in 2026. That’s bad news for Trump, the GOP, and the pundits who think they are being vindicated by the absence of a spike (here’s looking at you, Mr. Cass).