U.S. President Donald Trump and U.S. first lady Melania Trump walk during a ceremony marking the 24th anniversary of the September 11, 2001, attacks on the United States at the Pentagon, in Washington D.C., U.S., September 11, 2025. REUTERS/Evelyn Hockstein
Seven and one-half months into Donald Trump's second presidency, liberal economist and former New York Times columnist Paul Krugman is using a word that many Americans who are old enough to remember the late 1970s and early 1980s dreads hearing: stagflation. Trump's economic policies, Krugman warns, could lead to the painful combination of aggressive inflation, high unemployment and low economic growth that battered the United States during the presidencies and Jimmy Carter and Ronald Reagan.
In an article published on September 11, CNN's Alicia Wallace reports that Americans are facing a "cost of living continues to increase" while "the job market appears to be on shakier footing."
"Consumer prices rose 0.4 percent in August, driving the annual inflation rate to 2.9 percent — the highest since January, according to Bureau of Labor Statistics data released Thursday, (September 4)," Wallace explains. "The latest reading from the closely watched Consumer Price Index marks an acceleration from the 2.7 percent increase seen in July, with price hikes seen in some of the most common places in daily life. Grocery and fuel prices shot higher in August after falling the month before."
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Wallace adds, "Food at home prices rose 0.6 percent — the highest monthly jump in nearly three years — and gas prices climbed by 1.9 percent after falling 2.2 percent the month before."
The CNN reporter notes that in August, economists were "expecting the pace of price hikes to heat up…. as a wider swath of businesses passed along higher costs from President Donald Trump's expansive tariffs."
Meanwhile, the Wall Street Journal also reports that inflation is going up while job creation is going down.
WSJ notes that the 2.9 percent increase is "above the Federal Reserve's 2 percent target."
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"Even so, traders are confident the Fed will cut rates in response to a weakening labor market," the Journal reports. "Separate data early Thursday showed weekly initial jobless claims jumping to the highest level since 2021. Meanwhile, the European Central Bank kept its main rate on hold Thursday, as expected, following a more aggressive campaign of cuts than the Fed."
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Read the full CNN article at this link and the Wall Street Journal's reporting here (subscription required).