Biden not out of the woods yet on inflation despite recent trend
Haisten Willis
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While President Joe Biden focuses on the positives surrounding inflation, his GOP rivals are quick to remind him the metric remains far higher than ideal — and that voters notice every time they hit a grocery store or gas station.
Annual inflation slowed to 6.4% in January, the Bureau of Labor Statistics reported Tuesday, a sign that the price pressures that have torn through the economy are easing. However, that figure remains more than three times higher than the Federal Reserve’s 2% target.
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“Inflation in America is continuing to come down, which is good news for families and businesses across the country,” Biden said in a prepared statement. “Today’s data confirm that annual inflation has fallen for seven straight months.”
But the president was being highly selective in which figures to highlight. The rate of annual inflation has fallen from a summer peak of 9.1%, but inflation was at just 1.4% the month Biden took office, which is less than one-fourth of its current figure.
What’s more, prices for some common items have risen much more sharply, with natural gas up 26.7% year over year, electricity up 11.9%, airfare up 25.6%, and eggs up 70.1%.
The Republican National Committee was quick to jump on the negative side of the inflation report. The group issued a statement highlighting that year-over-year real wages have now been negative for 22 straight months and pointing to polls that show a record number of voters saying they are worse off under Biden
Conservatives have hammered Biden about inflation for well over a year, naming as a driving factor the $1.9 trillion American Rescue Plan that passed in March 2021 with no Republican votes. One RNC newsletter referred to the plan as “the original sin” of inflation.
If the president isn’t able to get it under control, inflation could become a major issue in 2024.
“Bidenflation is the worst inflation America has suffered since the Jimmy Carter era more than four decades ago, and, like Carter, Biden will lose reelection because of economic mismanagement,” said Tea Party Patriots Honorary Chairwoman Jenny Beth Martin. “Biden can’t put the inflation genie back in the bottle, which means he begins the 2024 race as a big underdog against any Republican nominee.”
Biden himself acknowledged there’s more work to do and tried to put the blame at the feet of the GOP by saying the party wants to repeal the Inflation Reduction Act, “shower billions of dollars on Big Pharma,” increase the national deficit, and cut Medicare and Social Security. Republican leaders have said repeatedly that slashing the entitlement programs is off the table.
Polling shows that the economy has been one of the rougher issues for Biden. His approval on the economy is just 38%, per the RealClearPolitics average, which is 6 points below his overall approval rating.
Despite that fact, Biden worked hard in the midterm elections to take the focus off of himself and place it on the threat of “MAGA Republicans” taking over Congress. That strategy was largely seen as successful, though it may be more difficult to repeat when Biden himself is on the ballot.
The Fed is working to balance raising interest rates in order to tame inflation without going too far and causing a recession. If that happened, it could greatly affect the presidential race, as did recessions ahead of the 1992 and 2008 elections.
Keeping the United States out of a recession may mean accepting a little more inflation for now, argues University of Massachusetts economics professor Gerald Friedman.
“The Fed should take comfort from this inflation number and risk more inflation going forward rather than pushing interest rates up again to slow the economy,” he said.
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But despite the apparent drop, even Friedman is not convinced the figure will continue dropping in the months ahead.
“The Biden administration has done a good job of cleaning up the ports and getting our supply chains working better, but there’s still a ways to go, and there’s still a war in Ukraine,” he said. “I’m not confident [inflation is] going to keep going down. I wish that I was.”