The Trump administration’s late-December economic victory lap is colliding with a core challenge raised by critics: the headline inflation and GDP figures are being treated as policy proof points even as key data inputs were allegedly disrupted and substituted.
The Bureau of Labor Statistics reported inflation fell to a 2.7% annual rate in November, down from 3.0% in September and below a 3.1% economist consensus. After this, the Bureau of Economic Analysis reported real GDP rose at a 4.3% annual rate in Q3 2025, the quarter ending September 30.
White House economic advisor Kevin Hassett called the inflation figure “an absolute blockbuster report” and the GDP figure “a great Christmas present for the American people.” House Speaker Mike Johnson followed the GDP release with “America is winning again,” calling it “the direct result” of GOP and Trump policies.
Los Angeles Times columnist Michael Hiltzik writes that the White House and Republican allies “seized on the figures” to tout “Trumponomics.”
Hiltzik argues the most important distortion driver was the 43-day federal government shutdown from October 1 to November 12, which created gaps in the data collected for the CPI.
“You’ve got to take it with a grain of salt. It’s confusing and it doesn’t quite square with prices that we’ve observed,” Diane Swonk, chief economist at KPMG US, told Hiltzik.
Swonk said steep cutbacks at the BLS reduced staff assigned to sampling prices by 25%, prompting substitution of “imputed” numbers for hard observations. She warned those substitutions “can show up as zeros” in the percent change, mechanically pushing the reported inflation rate lower.
She also said a sampling scheduled for mid-October was canceled, leading the agency to reuse August figures instead, which can conceal price increases that occurred in later months. Hiltzik adds that delayed sampling also missed seasonal moves such as airfares, where an originally scheduled collection would have captured a pre-Thanksgiving run-up, but later collection occurred after fares had returned to non-holiday levels.
Hiltzik reports housing costs are about one-third of CPI inputs, and because the BLS could not collect rental data for October, it implied a 0% monthly change in rents for that month, further skewing CPI lower. Experts cited say it will take at least six months of newly collected data to produce a reliable estimate of housing inflation.
Inflation data feed into GDP estimates. If inflation is artificially reduced, real GDP can look stronger, because lower measured inflation boosts “real” growth.
Hiltzik also argues the GDP upside was narrow, described as driven by robust spending by wealthy consumers and massive corporate investment in AI technology, while “middle- and lower-income Americans” face a less sunny outlook than the topline suggests.
Bank of America analysts said since spring, spending by the highest-earning third of Americans has been soaring while middle- and lower-income spending has stagnated. They tied part of the divergence to a vibrant stock market, noting the top 20% of households by income own about 87% of directly held equities, while “almost 30% of lower-income households” appear to be living paycheck to paycheck.
Labor market signals also appear softer than the headline macro prints. Fed Chair Jerome Powell, at a December 10 news conference after the Fed cut rates by 0.25 percentage points, said non-farm payroll gains averaged about 40,000 per month since April, but the Fed believes there is an overstatement of about 60,000, implying roughly negative 20,000 per month.
Hiltzik closes the loop with a forward timeline risk: economists warn some factors have not fully played out, including Trump’s tariffs, described as lower in execution than they appeared “on the surface,” and higher healthcare premiums that have been forecast or announced but do not take effect until 2026.
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