Investors parse delayed data as us inflation cools but remains above Fed target

Delayed federal data shows us inflation moderating, but the cost of living remains a central concern for households, investors and policymakers.

Shutdown-delayed CPI report shows slower annual price growth

The U.S. Labor Department reported Thursday that its consumer price index rose 2.7% in November from a year earlier. However, annual inflation is still well above the Federal Reserve’s 2% target, and Americans remain frustrated by persistently high prices for everyday necessities.

The report was delayed eight days because of the federal government’s 43-day shutdown, which also prevented officials from compiling overall consumer price and core inflation data for October. Moreover, Thursday’s release marked the first look at CPI since the September figures were published on Oct. 24, creating an unusually long data gap.

In September, consumer prices had risen 3% year-over-year, and many forecasters had expected the November CPI to show a similar annual increase. That said, the softer reading has prompted fresh debate over how quickly inflationary pressures are easing and how much the missing October data matters for trend analysis.

Economists warn of data distortions from the shutdown

Some economists cautioned that the November figures might not tell the full story. “It’s likely a bit distorted,” said Diane Swonk, chief economist at the tax and consulting firm KPMG. “The good news is that it’s cooling. We’ll take a win when we can get it.”

Still, Swonk stressed that the report has important limitations. “The data is truncated, and we just don’t know how much of it to trust,” she added. By disrupting parts of the economy, especially government contracting, the shutdown may itself have contributed to a temporary cooling in prices, complicating interpretation of the trend.

Energy prices underscored those complications. Driven by sharply higher fuel oil costs, overall energy prices rose 4.2% in November. Excluding volatile food and energy categories, so-called core inflation rose 2.6%, down from a 3% year-over-year gain in September and the lowest core reading since March 2021.

Tariffs, trade tensions and the Fed’s policy dilemma

U.S. inflation remains stubbornly elevated in part because of President Donald Trump‘s decision to impose double-digit taxes on imports from almost every country, alongside targeted tariffs on products such as steel, aluminum and autos. However, economists note that the tariffs have so far proved somewhat less inflationary than many initially feared.

Even so, these levies are putting upward pressure on prices and complicating the Federal Reserve’s policy choices. The central bank is weighing whether to keep cutting its benchmark interest rate to support a sputtering job market or pause until pricing pressures ease further. Last week, the Fed reduced its key rate for the third time this year, though officials signaled they expect just one cut in 2026.

Market strategists say the November consumer price index report leaves the Fed with limited clarity. However, many expect officials to focus more heavily on upcoming data, especially given the missing October numbers and the one-off effects of the shutdown on recent readings.

Focus shifts to December CPI as data deemed ‘noisy’

Some asset managers argue that the November data set is too noisy to guide policy. Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management, warned that the canceled October report makes month-on-month comparisons impossible. Moreover, the truncated information-gathering process during the shutdown could have introduced systematic biases.

“The Fed will instead focus on the December CPI released in mid-January, just two weeks before its next meeting, as a more accurate bellwether for inflation,” Haigh said. That timing means the December data could heavily influence the central bank’s early-year strategy on rates and balance-sheet policy.

Public discontent grows despite easing in headline data

While some indicators show tentative easing, the political and social backdrop remains tense. On Wednesday, Trump delivered a politically charged prime-time speech carried live on network television, seeking to pin blame for economic challenges on Democrats. However, the remarks largely repeated his recent messaging and have so far failed to ease public anxiety about rising household costs.

Grocery bills, housing, utilities and other basic goods remain flashpoints for voters. As the holiday season approaches, Americans are dipping into savings and aggressively searching for bargains, while many feel that the overall economy is sputtering. A new AP-NORC poll highlights how widespread the unease has become.

The Associated Press-NORC Center for Public Affairs Research found that the vast majority of U.S. adults have noticed higher-than-usual prices for groceries, electricity and holiday gifts in recent months. Moreover, roughly half of Americans say it is harder than usual to afford the items they would like to give as holiday presents.

Households cut back as businesses face tariff pressures

The survey also shows that many households are delaying big-ticket purchases or cutting back on nonessential spending more than they normally would. That said, the combination of elevated prices and softer demand is now feeding back into the corporate sector, especially among companies exposed to trade tensions.

Trump has repeatedly promised an economic boom, yet inflation has remained elevated while the job market has weakened sharply in the wake of his import taxes. Strategy has become a central concern for firms navigating the administration’s evolving tariff strategy and trying to protect margins without alienating cost-sensitive consumers.

Those pressures are evident at Wolverine Worldwide, the footwear group behind brands such as Merrell and Saucony. Trump’s tariffs are taking a toll: the Rockford, Michigan-based company faces extra tariff costs of $10 million this year and $55 million in 2026. As a result, Wolverine raised prices between 5% and 8% on some products in June and plans further increases next year.

Corporate uncertainty and global supply-chain shifts

The company has also frozen hiring and capital investment as it tries to manage higher input costs. Moreover, Wolverine is reshaping its global supply chain even as it absorbs the financial hit. China now produces less than 10% of its products, down sharply from earlier years.

During Trump’s first term, Wolverine shifted significant production to Vietnam. Now the company is moving more manufacturing to Bangladesh, Cambodia and Indonesia in search of cost stability and tariff relief. That said, executives say the challenge is not only the higher tax burden but also the unpredictable manner in which new levies are announced and implemented.

“From a business leader’s perspective, it’s one thing if there’s bad news,” said Wolverine CEO Christopher Hufnagel. “Just tell me what the bad news is, and I’ll go work to try to solve for it. It’s the uncertainty of how it actually plays out that causes so much trouble because then we’re modeling all these different scenarios and it seems like things can change in the middle of the night.”

Taken together, the delayed CPI data, tariff-related cost pressures and fragile consumer sentiment paint a complex picture for the inflation outlook. While headline gauges suggest some cooling, underlying forces in trade policy, corporate investment and household finances will continue to shape the path of prices and Federal Reserve decisions in the months ahead.