Unleash Prosperity Hotline
Issue #1272
05/27/2025
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1) Inflation Still Moderate Under Trump – So Far

Time for our latest report on prices.

Everyone - including us - warned that the Trump tariffs could reignite inflation. The jury is still out, but so far, at least, consumer and producer price rises have been tame. Our favorite forward-looking indicators of inflation still surprisingly show prices rising at around 2.5% to 3%. This is above the 2% target, but not a major problem - at the moment.

* Commodities - The CRB index of major commodities from corn to copper to coal,  show prices almost exactly where they were when Trump took office. The prices have tended to rise and fall based on the latest news on tariffs with market liking peace on the trade front.

* Gold - gold is a hedge against inflation and a rush to safety in times of economic turmoil. A rising gold price is always a bad sign. The gold price since the start of the year has surged by 26%. That's very worrisome, but after a spurt at the start of the year, over the past month, the gold price has stabilized.

* Ten Year Treasury - Since the start of the year the 10-Year Treasury interest rate has been flat but with wild fluctuations. The rate rose at the start of the tariff threats but has leveled off in recent weeks.

* Tips Spread - The Tips spread is the difference between yields of nominal and inflation-protected bonds. It measures how much inflation market participants expect to see over a certain period, based on the prices of these bonds. Since the beginning of the year, there has been about a one percent increase in the tips yield.

All of these charts tell pretty much the same story. The markets hate tariffs, but have become more confident of stabilized prices over the recent weeks as Trump lines up tariff deals with major trading partners  and as the prospects for the big beautiful tax bill continue to improve.

2) Anatomy of a Federal Medicaid "Racket"

Late last, year liberal New York Governor Kathy Hochul attacked a Medicaid home care program for seniors as "one of the most abused programs in the entire history of the state of New York." She noted that young family members "can make $37 an hour by sitting home with your Grandma." She correctly called this program "a racket."

Thanks - in part - to this program, New York's state-share Medicaid costs have nearly doubled in just five years:

And because New York exploits federal matching funds, that means federal taxpayers are paying too. Federal Medicaid spending to New York rose 21.2% in just the past year, to $69 billion.

But that's only half of the scam.

Our friend Mark Mix of the National Right to Work Committee notes that some of this money is pipelined straight into the bank accounts of the state's union bosses.

The Service Employees International Union (SEIU), NYC's largest health care union "has a government privilege that allows them to skim dues payments from the payouts of home health recipients (without any positive consent from them), as well as health care workers under the union's bargaining control across New York City."

Two questions:

First: Why would someone taking care of their grandmother at home have to be a member of a union?

Second: Why hasn't New York or the GOP Congress shutdown these graft payments from taxpayers' wallets to union coffers?

3) Josh Hawley and Right to Work

We got some pushback last week from our HOTLINE item on Republicans who are against right-to-work laws. Some readers don't believe that Missouri Senator Josh Hawley opposes Right to Work, and others think that forcing workers to join a union is the only "fair" solution.

Here is the YouTube video of Hawley on right to work:

"I do not support right to work because I believe it is unfair to union organizers to negotiate on behalf of workers who benefit from the contract but are not in the union."

One flaw in this argument is that many top performing workers do not "benefit" at all from union collective bargaining. The best workers - and employers know exactly who they are - often could do better negotiating wage and benefits on their own. All workers are not created equal.

As for the free rider problem, this is very simple to resolve: repeal federal labor laws that require unions to represent all workers in the factory, etc., whether they pay dues to the union or not. Union contracts should only apply to union members.

This gets rid of Senator Hawley's "fairness" issue once and for all.