Biden’s standing is weak right now, with his approval rating down sharply from its peak in the spring. Economic conditions in June of an election year-six months from now, for the 2022 midterms-typically foretell whether the party in power will gain or lose seats when voters render their judgment. (Photo by Spencer Platt/Getty Images)īiden still has some wiggle room. consumer prices to increase solidly in the past few months on items such as food, rent, cars and other goods. People shop at an outdoor food market in Manhattan on Novemin New York City. But if the Fed seems to be hiking because it got behind on inflation, a stock selloff could easily ensue, making gloomy Americans even grumpier. Fed tightening is always a delicate business, and if markets think the Fed is acting because the economy is strong enough to take it, they can absorb rate hikes without much damage. Unchecked inflation could also force the Federal Reserve to tighten monetary policy and raise interest rates sooner than expected, which could choke off a stock-market rally that has made millions of Americans much better off during Biden’s first 10 months in office. Voters who shunned Biden in the 2020 presidential election don’t need convincing, but these attacks will sway some people who did vote for Biden and now regret it. They also argue that Biden’s still unpassed “Build Back Better” legislation would stoke even more inflation, even though spending would roll out over a decade. Republicans say the Democratic stimulus bill passed in March is the principal cause of inflation, while ignoring several other stimulus bills from the Trump administration that preceded it. Biden is already the Grinch who stole Christmas. Higher real inflation also gives Biden’s Republican enemies tons of ammunition to demagogue the issue and fill the bogusphere with all kinds of false information blaming Biden for everything under the sun. This content is not available due to your privacy preferences. But higher rent, food and transportation costs are hard to work around, and voters ordinarily blame whoever is in charge when basic living costs go up. Those types of discretionary goods and services do contribute somewhat to the high 6.2% annual inflation rate. They can take more driving vacations, for instance, if airfare or rental cars are too expensive. Consumers can work around some types of inflation. First is the obvious difficulty it causes consumers who have to pay more for essentials such as gas, food and rent. Unchecked inflation poses three major risks to Biden and his fellow Democrats who hold slim majorities in both houses of Congress. Yet many factors pushing up inflation-surging demand amid Covid restrictions, limited port capacity, a shortage of truckers to deliver goods, the high cost of building new semiconductor facilities-simply defy quick fixes. He has a semiconductor task force to help ease a key shortage that’s choking auto production. Biden has already tried to unclog jammed ports with federal aid, to expand their operating hours, with minimal effect so far. Other maneuvers, such as banning energy exports, could gum up global supply chains even more than they are now and produce multiple negative consequences.
10 White House statement, “Inflation hurts Americans pocketbooks, and reversing this trend is a top priority for me.” He pledged government action to address soaring gasoline prices and other types of inflation. Health care costs, which have been uncharacteristically flat, have also started picking up.īiden acknowledged the pain, saying in a Nov. Food prices are now rising more than average, another direct strain on family budgets. But there’s new inflationary pressure from rent and housing costs, which tend to be “sticky” because when rents go up, they usually stay up. “That underlines our view that inflation will remain elevated for much longer than Fed officials expect.”įamiliar trends, such as the rising cost of energy, along with new and used cars, are still pushing inflation higher.
“This is mounting evidence that inflation pressures are building throughout the economy,” forecasting firm Capital Economics reported on Nov. More concerning than the topline number are new indications that rising prices are becoming a permanent feature of the economy instead of a fleeting anomaly. Overall inflation hit 6.2% in October, the highest level of price hikes in 31 years. Now, Biden and the Fed either have to redefine “temporary” or come up with a different narrative. Three months ago, President Biden assured his fellow Americans that a surge in inflation was “temporary.” The Federal Reserve largely concurred.
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