Inflation Dips, Private Jobs Surge in Trump’s Resilient Economy
In my previous column, “The BLS Affordability Boost,” I laid out how the January 2026 jobs report from the Bureau of Labor Statistics gave working families a tangible win. Private-sector payrolls jumped 172,000-far exceeding the consensus forecast of 55,000 to 80,000-while unemployment edged down to 4.3% and average hourly earnings rose 3.7% year-over-year. For the first time in a while, wage growth outpaced the prior month’s inflation reading, putting real dollars back in pockets here in Plano and across Texas.
Barely three days later, the February 13 CPI release for January served up another helping of reality to the expert class. Headline inflation rose just 0.2% month-over-month on a seasonally adjusted basis and 2.4% year-over-year-down from December’s 2.7% and below the economists’ expected 0.3% monthly and 2.5% annual figures. Core inflation (excluding food and energy) came in on target at 0.3% monthly and 2.5% annually, but the headline undershoot was driven by sharper drops in energy prices, particularly gasoline falling 3.2%, alongside continued moderation in shelter costs. Food edged up modestly, and a few services like airline fares spiked, but the overall print pointed to cooling.
The media response followed the familiar script: “welcome surprise,” “downside surprise,” “cooler than expected.” It’s the same tune we heard after the jobs data-forecasters cluster around one view, the numbers come in stronger or softer in the other direction, and the narrative quietly adjusts to “unexpected.” Ronald Reagan captured this phenomenon perfectly decades ago. In remarks preserved in his book Speaking My Mind, he told the story of a friend invited to a costume ball: “He slapped some egg on his face and went as a liberal economist.” Reagan knew then what we’re seeing now: certain economists and forecasters repeatedly predict pain from policies they dislike, only to watch reality deliver growth, cooling prices, and resilience instead.
This pattern isn’t random. The Trump economy is succeeding in spite of genuine headwinds. The Federal Reserve’s federal funds rate remains in the 3.50%–3.75% target range, with the effective rate hovering around 3.64%. That’s a full point to one-and-a-half percentage points above any plausible neutral level, based on estimates that place nominal r-star closer to 2%–2.5%. Higher borrowing costs weigh on investment and housing activity, yet the private sector continues to show strength. The labor market isn’t cooling in the classic sense-it’s changing, shifting toward legal, market-rate hiring for American workers as the old dependencies fade.
Mass deportations and self-deportations-millions of people no longer in the country-have removed significant consumer demand from everyday markets. Fewer households competing for rentals, groceries, fuel, and utilities eases price pressure in real communities. Here in the Dallas-Fort Worth area, that dynamic is visible. Median rents have softened noticeably year-over-year, with reports showing drops ranging from about 1.8% to as much as 3.8% in various submarkets. Average figures sit around $1,460 to $1,670 per month depending on the source, with higher vacancy rates prompting landlords to offer longer concessions and more flexible terms. Bidding wars have quieted in many neighborhoods, and competition for units has eased, especially in areas where population shifts were pronounced. The same relief appears at grocery stores and gas pumps-less overall demand for staples means steadier supply and softer upward pressure on prices.
Businesses that relied heavily on low-cost illegal labor are feeling the pinch hardest. In South Texas, particularly the Rio Grande Valley, construction timelines have stretched dramatically-projects that once wrapped in four to five months now drag on for eight to ten or longer. Interrupted concrete pours cost tens of thousands per site, suppliers report revenue declines of 30% to 60%, and some companies have filed for bankruptcy. Fear of enforcement keeps workers-documented or not-away from job sites, spreading word-of-mouth warnings that disrupt schedules. The core issue is clear: firms built around exploiting cheap, vulnerable labor or unwilling to pay competitive wages can’t sustain themselves when that labor disappears. The market forces adaptation-hire American workers, offer fair pay and benefits, recruit from the established Chicano workforce in places like the RGV-or the unsustainable models fail. Resources then flow to businesses that compete legitimately, pushing wages higher for legal talent and reallocating the economy toward stability.
Tariffs faced the same chorus of doom from day one after Liberation Day in April 2025. Forecasters warned of sharp inflation spikes, meaningful GDP drags, household cost increases in the thousands, and recession risks. None of that materialized in full. Headline inflation cooled to 2.4% year-over-year in January, growth remained solid through late 2025, and no downturn hit. Effective tariff rates averaged around 13% after adjustments, with brief peaks higher, but supply chains adapted through price concessions from exporters and trade diversion to other partners. Revenue from tariffs surged into the hundreds of billions, providing fiscal room without broad tax hikes.
The real story with tariffs is the leverage they created. Foreign policy concessions followed: deals with China on fentanyl flows and rare-earth exports, market-access agreements with the EU and UK, migration and border commitments from Mexico and Canada. Domestically, the standout achievement is TrumpRx-the government portal launched in early February 2026 that lets uninsured or cash-paying patients buy discounted brand-name drugs directly from manufacturers, bypassing middlemen. It started with dozens of medications from major companies, including obesity treatments at hundreds less per month than list prices, and more are being added. The platform was born from tariff threats on imported drugs, which pressured firms to negotiate most-favored-nation pricing and commit to U.S. manufacturing investments worth billions. This is one of the most significant drug-price reforms in decades, delivering relief where families need it most.
Economic models struggle to capture these outcomes because their inputs often reflect preferences that differ sharply from the current administration’s direction-higher sustained immigration, lower or no tariffs, freer flows of labor and goods. Assumptions about how demand and supply interact, retaliation levels, or elasticities tilt toward pessimistic views of restrictive policies. When predictions fall short-tariffs not triggering runaway inflation in 2025, deportations easing demand without broad price surges-the fallback is “lagged effects” or “not yet scaled.” Community-level evidence tells a different story: softer rents, reduced grocery pressure, businesses compelled to hire competitively. These ground truths frequently outpace the aggregates.
Looking forward, the February CPI report (due in March) has a good shot at showing further cooling-potentially dipping below 2.4% year-over-year headline, beating the consensus call around 2.5%. The February jobs report should reflect continued net positives for American private-sector workers, with solid gains in resilient areas like health care, construction, and services as the reallocation progresses. The Trump economy keeps outperforming despite the Fed’s caution.
Focus on what’s durable: cooling inflation, private-sector strength, affordability improvements from real demand relief, and policy tools delivering results. The expert parade of embarrassment continues, but families here in Plano and throughout America are experiencing the gains firsthand.
