Personal Finance
Here’s the deflation breakdown for October 2024 — in one chart
As inflation has throttled back from pandemic-era highs, consumers have seen prices decline outright for many household items.
This dynamic, known as deflation, generally doesn’t occur on a broad, sustained scale in the U.S. economy: With limited exceptions, businesses are generally loath to lower prices once they’ve increased, economists said.
But some pockets of the economy — largely, prices for physical goods from new cars to appliances, sporting goods, consumer electronics and certain apparel — have deflated over the past year, according to the consumer price index.
“We are seeing [deflation] to some extent,” said Stephen Brown, deputy chief North America economist at Capital Economics.
Largely, prices have pulled back as pandemic-era contortions in supply and demand dynamics unwind, economists said. The U.S. dollar has also been relatively strong against major global currencies, making it cheaper to import goods from overseas.
But supply chains have “normalized” and deflation has “moderated to a pretty significant degree” as a result, said Mark Zandi, chief economist at Moody’s.
Where there has been deflation
Prices for some categories — like furniture and bedding, men’s clothing, cosmetics and used cars and trucks — are down from October 2023, but they’ve rebounded somewhat in recent months, according to CPI data.
That said, used cars and trucks should see a resumption of deflation since “wholesale prices have fallen recently, and supply and demand continues to improve in the sector,” Bank of America economists wrote on Monday in a research note.
Energy prices and electronics
Gasoline prices are also “way down,” Zandi said.
They’ve declined more than 12% in the past year, according to CPI data. Drivers paid $3.05 a gallon, on average, at the pump as of Nov. 11, according to the U.S. Energy Information Administration.
Consumers “could get more relief there because global oil prices are soft,” Zandi said.
That softness may be in anticipation of President-elect Donald Trump’s proposed policies around China, said Zandi. Those may include tariffs of at least 60% on goods imported from China, a nation with a huge appetite for oil. If Trump’s policies were to negatively affect the Chinese economy, they’d also likely dampen China’s oil demand.
Other energy commodities refined from oil have also seen huge price declines. Fuel oil prices, for example, are down over 20% in the past year, a trend that should contribute to lower prices elsewhere such as for airfare, economists said.
Food prices are also generally underpinned by their own unique supply-and-demand dynamics, economists said. Turkey, snacks and bacon are about 4% cheaper than they were a year ago, for example.
Lower energy prices can also take pressure off food prices, as it costs less to transport and distribute food to grocery store shelves.
Consumer electronics have also seen big price declines: Computers, video equipment and smartphones are respectively 5%, 10% and 9% cheaper than they were a year ago, according to CPI data.
But consumers might not experience those lower prices at the store: They may only exist on paper.
That’s due to how the Bureau of Labor Statistics measures inflation for certain consumer goods like electronics, economists said.
Technology continually improves, meaning consumers get more for their money. The BLS treats those quality improvements as a price decline, giving the illusion of falling prices on paper.
Senate Majority Leader John Thune (R-SD), left, listens to Sen. Mike Crapo (R-ID), center, chair of the Senate Finance Committee, speak to reporters outside of the West Wing of the White House on June 4, 2025.
Anna Moneymaker | Getty Images News | Getty Images
Republicans proposed offering a tax break to tipped workers, as part of a package of tax cuts the Senate Finance Committee unveiled Monday. GOP lawmakers are trying to pass their multitrillion-dollar megabill in coming weeks.
The Senate measure — which aims to fulfill a “no tax on tips” campaign pledge by President Donald Trump — is broadly similar to a provision that House GOP lawmakers passed in May as part of a domestic policy bill.
In both versions, the tax break is structured as a deduction available on qualified tips. The Senate legislation defines such tips as ones that are paid in cash, charged or received as part of a tip-sharing arrangement.
Taxpayers — both employees and independent contractors — would be able to claim it from 2025 through 2028. Filers could take advantage whether they itemize deductions on their tax returns or claim the standard deduction.
Key differences in ‘no tax on tips’ proposals
However, the Senate proposal is different from the House version in two key ways, Matt Gardner, senior fellow at the Institute on Taxation and Economic Policy, wrote in an e-mail.
First, the Senate legislation would cap the tax deduction at $25,000 per year, while it is uncapped in the House bill, Gardner wrote.
Also, the income limits work differently in the Senate legislation, he wrote.
The House bill makes the tax deduction completely unavailable once an individual’s income hits $160,000 per year.
By comparison, the Senate bill would gradually reduce the value of the tax deduction once an individual’s income exceeds $150,000, or $300,000 for married couples. The Senate would dilute the tax break’s value by $100 for every $1,000 of income over those thresholds.
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Senate Republicans, like those in the House, would limit the tax break to tipped workers in occupations that “customarily and regularly” had received tips on or before December 31, 2024.
The bill text directs the U.S. Treasury Secretary to publish a list of those occupations within 90 days of the legislation’s enactment.
Few workers would benefit from ‘no tax on tips’
A “no tax on tips” proposal seems to have bipartisan appeal in the Senate, which unanimously passed a similar standalone measure last month. Former Vice President Kamala Harris also supported a tax break on tips during her 2024 presidential campaign.
However, the tax break wouldn’t benefit many workers, tax experts said.
There were roughly 4 million workers in tipped occupations in 2023, about 2.5% percent of all employment, according to an analysis last year by Ernie Tedeschi, director of economics at the Budget Lab at Yale and former chief economist at the White House Council of Economic Advisers during the Biden administration.
Additionally, a “meaningful share” of tipped workers already pay zero federal income tax, Tedeschi wrote. In other words, a proposal to exempt tips from federal tax wouldn’t help these individuals, who already don’t owe federal taxes.
“More than a third — 37 percent — of tipped workers had incomes low enough that they faced no federal income tax in 2022, even before accounting for tax credits,” Tedeschi wrote. “For non-tipped occupations, the equivalent share was only 16 percent.”
Tax deductions reduce the amount of income subject to tax (or, taxable income) and are generally more valuable for high-income taxpayers relative to tax credits.
The Economic Policy Institute, a left-leaning think tank, said it believed a better way to help workers would be to raise the federal minimum wage.
A “no tax on tips” provision “gives the illusion of helping lower-income workers — while the rest of the legislation hands huge giveaways to the rich at the expense of the working class,” EPI economic analysts wrote Thursday.
How Trump accounts work
Not unlike a 529 college savings plan, Trump accounts come with a tax incentive. Earnings grow tax-deferred, and qualified withdrawals are taxed as long-term capital gains.
Under both the House and Senate versions of the bill, withdrawals could begin at age 18, at which point account holders can tap up to half of the funds for education expenses or credentials, the down payment on a first home or as capital to start a small business.
At 25, account holders can use the full balance for expenses that fall under those same guidelines and at 30, they can use the money for any reason. Distributions taken for qualified purposes are taxed at the long-term capital-gains rate, while distributions for any other purpose are taxed as ordinary income.
$1,000 baby bonus: Who is eligible
Young family with a baby boy going over finances at home.
Pekic | E+ | Getty Images
For children born between January 1, 2024, and December 31, 2028, the federal government will deposit $1,000 into the Trump account, funded by the Department of the Treasury, as part of a “newborn pilot program,” according to the Senate Finance Committee’s proposed text released on Monday.
To be eligible to receive the initial seed money, a child must be a U.S. citizen at birth and both parents must have Social Security numbers.
If a parent or guardian does not open an account, the Secretary of Treasury will establish an account on the child’s behalf. Parents may also opt out.
Trump account pros and cons
The White House and Republican lawmakers have said these accounts will introduce more Americans to wealth-building opportunities and the benefits of compound growth. But some experts say the Trump accounts are also overly complicated, making it harder to reach lower-income families.
Universal savings accounts, with fewer strings attached, would be a simpler alternative proposal at a lower price tag, according to Adam Michel, director of tax policy studies at the Cato Institute, a public policy think tank.
“I’m disappointed the Senate did not take the opportunity to improve these accounts,” Michel said. Still, “provisions that remain in both the House and Senate text, we should expect them to become law, and this provision fits that criteria.”
Mark Higgins, senior vice president at Index Fund Advisors and author of “Investing in U.S. Financial History: Understanding the Past to Forecast the Future,” said the key is “if the benefits comfortably exceed the cost.”
According to the Committee for a Responsible Federal Budget, Trump accounts would add $17 billion to the deficit over the next decade.
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