‘Keep it simple, stupid’: Former Home Depot CEO says Trump’s proposals resonate with all Americans ‘dying under 9.1% inflation.’ Here’s the real story behind the US affordability crisis

Nardelli’s response was emphatic.

“Yeah, you know the old saying, ‘Keep it simple, stupid,’” he remarked. “I think everything he’s proposing is right to the common man — it’s all of us that are dying under this 9.1% inflation.”

Nardelli was referring to the 9.1% annual increase in the U.S. Consumer Price Index (CPI) recorded in June 2022 — the highest 12-month jump in inflation since November 1981. While the headline inflation rate has since moderated, Nardelli remains concerned about the long-term impacts.

“While [inflation] came down, David, it’s still out there today. Those prices, they’re not rolling back,” Nardelli explained.

The inflation reality

The story of U.S. inflation in the years following the COVID-19 pandemic is one of sharp and rapid change.

In early 2020, the pandemic-induced lockdowns brought economic activity to a near standstill. Supply chains were disrupted, businesses closed, and demand for many goods and services dropped significantly.

In response, the Federal Reserve slashed interest rates to near zero, and the U.S. government injected trillions of dollars into the economy through stimulus programs. These measures were designed to prevent an economic collapse, and in the short term, they did.

However, as the economy began to recover in late 2020 and into 2021, inflation pressures started to build. Supply chains were still constrained, and pent-up consumer demand surged as businesses reopened.

The combination of too much demand and too little supply created the perfect environment for prices to rise. In 2021, inflation began to climb rapidly, with the CPI hitting year-over-year growth rates not seen in decades.

And then, in June 2022, the CPI hit a staggering 9.1% — the highest rate in 40 years. The surge was fueled by several factors, including skyrocketing energy prices following Russia’s invasion of Ukraine, ongoing supply chain disruptions and labor shortages. Prices for essential goods like food, gasoline and housing rose sharply, hitting households particularly hard.

The Federal Reserve, which initially characterized inflation as "transitory," changed course. Starting in March 2022, the Fed began aggressively raising interest rates to cool off the economy. By making borrowing more expensive, the Fed aimed to reduce demand and bring inflation under control.

By 2023, inflation began to moderate, falling below 5% as supply chain bottlenecks eased, energy prices stabilized, and the effects of higher interest rates began to take hold.

The pace of inflation has slowed further in 2024. By September, U.S. CPI had increased by just 0.2% month over month and 2.4% over the last 12 months.

The Fed also shifted its stance. On Sept. 18, the U.S. central bank implemented its first rate cut since March 2020, lowering the target for the federal funds rate by 50 basis points to a range of 4.75% to 5.00%.

Feeling the pinch

Nardelli makes a valid point when he highlights that prices “are not rolling back,” despite a decrease in the rate of inflation. While inflation may have slowed, the overall cost of living remains significantly higher than before.

Since the beginning of 2020, the Consumer Price Index (CPI) has surged by 22%. Essential items, in particular, have seen steep price hikes. For instance, the food index has jumped by 27%, and the shelter index has climbed by 25% over the same period.

In other words, despite recent progress, the elevated cost of living continues to weigh heavily on households, particularly when it comes to essentials like groceries and rent. As the effects of inflation ripple through the economy, the issue has become a central focus of the 2024 election.