WASHINGTON, D.C. – Trump scored a big win this week when a new U.S. economic report brought some welcome news. The Consumer Price Index (CPI) showed inflation easing to 2.4% in January, down from 2.7% in December. That’s the lowest reading since mid-2025.
At the same time, the Bureau of Labor Statistics said employers added 130,000 jobs. That beat forecasts near 70,000. The unemployment rate also ticked down to 4.3%.
Both reports arrived after a short delay tied to a partial federal government shutdown. Even so, the message was clear. Hiring stayed steady, and price growth cooled. The White House pointed to the combination as a sign that workers are gaining purchasing power, since wages have been rising faster than inflation.
Inflation Slips as Energy Falls and Last Year’s Price Spikes Fade
January’s CPI rose 0.2% from the prior month, under the 0.3% increase many economists expected. Over the past year, the headline rate slowed to 2.4%, the softest pace in eight months. Core CPI, which removes food and energy, eased to 2.5% year over year.
Several categories helped pull inflation lower:
- Energy prices dropped 1.5% for the month, with gasoline down 7.5%.
- Shelter costs rose 0.2%, while food also increased 0.2%, both in line with a gentler trend.
- Used cars and trucks fell, which helped offset smaller increases in services like airline fares and medical care.
Economists said part of the improvement came from base effects. In other words, the high price jumps from January 2025 no longer weighed on the yearly math. Softer commodity prices also helped. Still, some analysts warned that service costs remain sticky, which could slow progress from here.
For now, the Federal Reserve has kept interest rates steady. Officials want to see inflation keep moving toward the 2% target without stalling the economy.
Hiring Under Trump Beats Expectations, Even as 2025 Gets Marked Down
On the jobs side, January payrolls increased by 130,000. That followed a revised 48,000 gain in December. Private employers added 172,000 jobs, while losses in federal government and financial activities held down the total.
Job growth showed up most in:
- Health care and social assistance, which continued to lead hiring
- Construction, supported by ongoing infrastructure work
- Business and professional services, which stayed firm
Meanwhile, the unemployment rate slipped to 4.3% from 4.4%. Household employment also jumped, which helped explain the lower rate. Wages kept climbing, too. Average hourly earnings have been running around 3.7% higher than a year earlier in recent months.
However, the report also came with a big reset for last year. Annual benchmark revisions cut total 2025 job growth from 584,000 to 181,000, or about 15,000 per month. The update reflected new Census data and changes to modeling assumptions. It also reinforced the idea that 2025 looked like a “low hire, low fire” year, with most net gains concentrated in areas like health care.
White House Highlights Real Wage Gains and Better Purchasing Power
Administration officials moved quickly to frame the numbers as good news for workers. They said real wages have improved as inflation cooled, which helps families stretch each paycheck further. The White House also said some blue-collar industries, including construction, manufacturing, and mining, have seen stronger gains. In some cases, officials suggested inflation-adjusted earnings could rise by $1,300 or more per year.
At the same time, the administration argued that earlier inflation had eroded purchasing power for many households. They credited policy changes, spending restraint, and domestic investment efforts for easing price pressure and supporting wage growth.
“These numbers show American workers are winning big, wages are surging ahead of inflation, restoring the purchasing power families deserve,” a White House spokesperson said in response to the reports.
What It Could Mean for Markets and the Fed
Together, softer inflation and solid hiring created a generally upbeat setup for investors. Stocks gained on hopes that the economy can keep growing without another spike in prices. Bond yields stayed fairly steady as traders weighed the stronger jobs number against the cooler CPI reading.
Many analysts expect the Fed to stay on hold through much of 2026. Policymakers want consistent proof that inflation is staying lower. At the same time, a steady labor market reduces recession worries. Still, it could push rate cuts further out if wage growth stays strong.
For households, the mix of slower inflation and ongoing job creation offers some breathing room. Gas and grocery prices showed signs of relief. Even so, housing and other services continue to put pressure on budgets.
As 2026 moves forward, the focus will stay on whether this early progress holds. The economy still has to work through the after-effects of 2025’s slowdown, along with outside forces such as trade policy shifts.
