Trump holds emergency cabinet meeting on energy costs

My regular readers know that when it comes to the economy, as far as I am concerned, one of the most significant factors is energy prices.

The trickle-down effect of energy prices is undeniable, but it is something that I really don’t think most people understand when it comes to inflation and the price of goods.

All About Energy

I just finished reading a report in CEPR about the influence of energy prices in terms of inflation that I thought might be a bit helpful here.

In part, the report stated, “In many European countries, much of the increase in inflation was caused by large increases in energy prices, especially after Russia launched its full-scale invasion of Ukraine (Pallara et al. 2023).

“At the same time, energy prices were rising and inflation expectations of both households and firms had increased substantially.”

Those couple of lines explain a lot about why Trump had such a great economy during his first term. He had made the country energy independent, and that was showing up at the gas tank and utility bills. And when Biden went to war with fossil fuel companies, it changed everything.

Emergency Meeting

Trump and EPA Administrator Lee Zeldin are working to remove a lot of the regulations on the energy sector to get the prices down for the American people.

To that point, Trump reportedly called a meeting of his department heads to talk about what they are going to do in order to get the prices down as quickly as possible, which will help lower inflation and the prices of goods.

As Trump was holding his meeting, it was announced that oil prices had dipped to levels rarely seen during the Biden administration, to which Trump replied, “That’s phenomenal news and that’s what brought [prices] up… they took our beautiful energy policies and they just messed them up. They lost that bronco, as the expression goes.”

After the meeting, Zeldin was very upbeat, stating, “The American people elected President Trump with a mandate last November to unleash American Energy and lower the cost of living for hardworking Americans. Under the President’s leadership, EPA is proud to do its part to usher in this Golden Age of American Success. These 31 actions will help make life in America more affordable again, and jobs more abundant, while Powering the Great American Comeback.”

The Market and the Media

The media has feasted on Trump killing the economy with his tariffs, predicting a massive recession and pointing to the recent dip in the stock market as proof that investors are not buying into Trump’s plan.

After Thursday’s decline, Ed Yardeni, president of Yardeni Research, stated, “The stock market is losing its confidence in the Trump 2.0 policies.”

He probably should have waited until Friday. The DOW closed up more than 600 points, so all that money will now marinate over the weekend.

My friends asked me what I thought about Trump’s move, and I told them I believe he is mostly posturing, and this will all work out. Oh, and by the way, after the market dropped nearly 2,000 points over just a few days, I doubled my IRA contributions… so that should tell you what I think.