The Trump Administration started Friday with the bad news that inflation, as measured by the personal consumption expenditure price index – the Fed’s preferred metric – came in at a year-over-year rate of 2.9 percent. That was up from 2.8 percent in December 2024. Meanwhile, core (non-food, non-energy) inflation registered 3.0 percent – or precisely the same as December 2024.

It is a terrible thing to make no progress on inflation for a whole year, especially when the top political issue is affordability.

The Bureau of Economic Analysis then delivered the awful news that the (annualized) growth rate of gross domestic product was 1.4 percent in the 4^th quarter of 2025, down dramatically from the 4.4 percent rate in the 3^rd quarter and not within hailing distance of the golden age of the American economy. Granted, the government shutdown subtracted a bit over a point from the growth rate, but 2.5 percent is hardly what anyone hoped for.

Inside the topline, personal consumption expenditures on durable goods fell at a rate of 0.9 percent, non-durable goods spending rose at a modest 0.4-percent rate, while services held up at 3.4 percent. The shaky performance of durable goods spending is consistent with price pressures from tariffs, poor consumer sentiment, and the fact that real disposable income did not grow – yes, that means zero – for the second consecutive quarter. While business investment spending remains solid, the foundations of the household sector are not nearly as robust as one would like.

It is a terrible, horrible thing to end up with a growth record below that of the final year of the Biden Administration.

Enter the Supreme Court of the United States, which delivered the horrific news that in a 6–3 decision it ruled against President Trump’s use of the International Emergency Economic Powers Act. It thus struck down the so-called “Liberation Day” tariffs and the fentanyl-related tariffs on China, Canada, and Mexico. The decision threw into unknown territory the future of the tariff regime, the trade deals negotiated using the tariffs as leverage, and the process of refunding the tariffs collected.

It is a terrible, horrible, no good thing to thumb your nose at the Constitution and get caught.

What do you do with a terrible, horrible, no good, very bad Friday? Impose an across-the-board tariff of 10 percent (using Section 122 of a 1974 trade law) for 150 days – the maximum allowed by the statute. Then, get a good night’s sleep, wake, and raise the 10 percent to 15 percent – again, the maximum allowed by the statute. Oh, and by the way, not everyone agrees that the Section 122 tariffs are legal.

Welcome to a yet-to-be-decided Monday!