Inflation issue still looms for Biden despite progress
Haisten Willis
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President Joe Biden has boasted about falling inflation but may have spoken too soon.
Speaking during a Friday night address on the debt ceiling, Biden claimed that inflation was still falling, just days after the Bureau of Economic Analysis announced that the Federal Reserve’s preferred inflation gauge rose in April.
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“More Americans are working today than ever in the history of this country. And inflation has dropped 10 straight months in a row,” the president claimed.
Most experts predicted that would in fact be the case, with the annual personal consumption expenditures price index expected to fall to 3.9%. Instead, the Biden administration reported May 26 that the index rose two-tenths of a point, from 4.2% to 4.4%.
While that’s only a modest increase and far below the 9.1% peak inflation reached last summer, it’s still more than double the Fed‘s target inflation rate of 2%.
Conservatives, who have hammered Biden for nearly two years over rising prices, say it’s a sign that he still doesn’t have the issue under control.
“Real wages declined for the 26th consecutive month as Bidenflation continues to outpace average wage growth,” said Alfredo Ortiz, president and CEO of Job Creators Network. “Despite Biden’s claims to the contrary, the Fed’s favorite indicator shows that inflation is accelerating once again.”
Ortiz blames inflation on massive spending Biden authorized upon taking office, such as the $1.9 trillion American Rescue Plan stimulus bill, which was passed with zero Republican votes.
“The Biden presidency will forever be marked as one where Americans got poorer and saw their living standards decline,” he said.
Inflation stood at 1.4% the month Biden was sworn in, reached 5% by May 2021, and peaked at 9.1% in June 2022. But the number has fallen more or less steadily in the year since.
The Fed responded to rising prices by sharply raising interest rates in an attempt to cool off the economy, though unemployment so far remains low and job growth strong.
Biden has celebrated those developments over the last months, taking a victory lap every time a new jobs report comes in.
“The Biden economic plan is working,” he said last Friday. “And due to the historic action taken by Congress this week, my economic plan will continue to deliver good jobs for the American people in communities throughout the country.”
That statement came after the May jobs report showed that the economy added 339,000 nonfarm jobs last month, far surpassing projections, and Congress voted to raise the debt limit. Unemployment rose slightly but remains below 4%.
That means the president may stick the soft landing he’s been targeting from the stimulus-ridden pandemic economy, argues University of Massachusetts economics professor Gerald Friedman.
“Economists are supposed to be really pessimistic and always seeing the glass half empty, but what can you say?” he said. “Inflation is drifting down, the economy is getting headwinds, we’ve somehow survived the debt ceiling, and we’re adding hundreds of thousands of jobs a month.”
Friedman predicted the Fed will likely stop raising interest rates going forward, especially as election season approaches.
“Once the Republican presidential debates start, they’ll definitely try to minimize how much they act,” he said.
Voters will ultimately decide how they feel individually about the economy, inflation, and the impact on their wallet since Biden took office.
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A University of Michigan consumer survey found that most respondents expect inflation to go up rather than down in the coming years, which could be a worrying sign for Biden. And widespread expectations of inflation can be a self-fulfilling prophecy if consumers then act in ways that accelerate inflation.
Should inflation continue to fall after the recent uptick, Biden will still need to convince the electorate that the economy is strong and will grow stronger under his watch.