An earlier series of posts tracked the path of the CPI, wages, and inflation-adjusted (or real) wages during President Biden’s term of office. President Trump has now been in office for eleven months, and there has been much talk in the press about inflation and affordability. Here we examine the data on inflation and on wage growth adjusted for inflation. Given concerns about a slowing labor market, we also examine the unemployment rate during this period.
The data used here is the headline CPI, the CPI-U, seasonally adjusted, as well as the average hourly earnings of all employees in the private sector, also seasonally adjusted. These data are released by the Bureau of Labor Statistics every month, and currently both data series are available through the month of November 2025. There is missing data for the month of October, as data used to construct the CPI-U was not collected during the government shutdown, but we do have a measure of the CPI-U for November.
The first graph below shows the CPI, rebased to 100 at the beginning of President Biden’s administration (January 2021) and at the beginning of President Trump’s second term (January 2025). For President Biden, the price level in the graph is set to 100 in January 2021, his inauguration, and then that price level changes by the same percent as the CPI changes for all months through January 2025, the last month of the Biden Administration.
The Federal Reserve’s 2% per year target for inflation is also shown.[1] That dashed line indicates the path the CPI would take if it was to grow monthly at a rate that generated 2% per year inflation.
For President Trump, the graph again has a rebased price level set to 100 in his inauguration month, January 2025, and then that price level changes by the same percent as the CPI changes for all months that follow. Currently the available data is through November 2025, 10 months from President Trump’s inauguration month.
The price graph is revealing. The blue line shows the movement in the CPI during President Biden’s term, with the initial period of rapidly rising prices from January 2021-June 2022, followed by slower but still-rising price level growth from that summer of 2022 until the end of his term.
The red line shows the price level increases during these early months of the President Trump’s current term. It is hard to distinguish the red line from the Fed’s target line in green. Prices have risen from January through August at an annual rate of 2.24%, not far above the Fed’s 2% target path. If the Fed’s 2% target for inflation in the PCE Price Index is roughly equivalent to a 2.33% inflation rate in the CPI, then CPI-inflation over this period is slightly below the Fed’s target.[2]
What about real wages? Real wages only increase if wage increases exceed price level increases. The path of real wages during the Biden presidency and during the early months of the current Trump Administration are shown in the second graph. Real wages fell during the early period of the Biden Administration, as the CPI increased more rapidly than wages were growing, resulting in a decline in the purchasing power of wages. This occurred during the period from January 2021 – summer 2022. Afterwards, real wages increased, slowly, for the remainder of President Biden’s term in office. However, the purchasing power of real wages never quite made it back to the level of January 2021.
During President Trump’s short second term, wages have grown at a 3.45% annualized rate while prices have grown at an annualized rate of 2.24%. The result has been an annualized growth in real wages -- in the purchasing power of wages -- of 1.19%. To put this in perspective, real wages from March 2006 through August 2025 grew by an average annual rate of 0.6%. The growth rate of real wages over the first ten months of President Trump’s current term is nearly twice this long-term average.
Finally, what about the unemployment rate? Figure 3 shows the unemployment rates during the months of the two administrations. President Biden took office during the COVID pandemic, with an unemployment rate of 6.4%. That unemployment rate fell steadily until the middle of 2022, at which point it hit a plateau of about 3.5%. During the last 18 months of his presidency the unemployment rate rose somewhat, but at the end of his term the unemployment rate was 4.0%.
President Trump was inaugurated in January 2025 with the unemployment rate at 4.0%. The unemployment rate rose slightly in the first few months, to 4.2%, but then read 4.1% in June 2025, his fifth month. From there the unemployment rate rose every month, reaching a value of 4.6% in November.
The inflation story for President Trump’s second term has been, so far, a good one, especially as contrasted with his predecessor. The real wage story has also been favorable. In contrast, the unemployment rate tells a much less positive story, with a rising rate and many anecdotes pointing to a slowing labor market.
ENDNOTES
[1] The Federal Reserve’s 2% year-over-year inflation target is stated in terms of the Personal Consumption Expenditure Price Index. The CPI generally overstates inflation relative to the PCE Price Index. From January 2010 to September 2025, the PCE Price Index increased at an annual rate of 2.25% while the CPI increased at an annual rate of 2.58%, a difference of 0.33%. This suggests that if the Fed were to exactly hit its 2% PCE Price Index inflation target, the CPI inflation rate would likely be 0.33% higher, or 2.33%.
[2] The CPI inflation rate for November, measured year-over-year, was 2.7%. This is the CPI inflation rate from November 2024 – November 2025. The CPI inflation rate from January 2025 - November 2025, annualized, was 2.24%. Why the difference? The year-over year measure includes November 2024 - January 2025, and in that period the annualized inflation rate was 5.1%, much higher than the annualized increase for the period January 2025 – November 2025.