Home Economy The sobering inflation report dampens Biden’s claims of economic progress

The sobering inflation report dampens Biden’s claims of economic progress

by SuperiorInvest

WASHINGTON — President Biden met with top Democrats at the White House on Tuesday to celebrate their fight against inflation at an inopportune time, as a new report showed how far the economy still has to go to bring soaring consumer prices under control.

The Consumer Price Index Report for August it contained a heavy dose of unwelcome news for the president, who was trying to soften Republican attacks on rising prices in the run-up to the November election. It showed that inflation had not cooled as White House economists and other forecasters had hoped, and that workers had lost purchasing power over the past year as prices rose faster than wages.

Another report from the Census Bureau showed that the typical American household saw a slight decline in inflation-adjusted income in 2021 compared to 2020. It’s perhaps even more troubling for a president who has promised to close the gap between the very rich and the middle class. showed that income inequality increased last year for the first time in ten years.

The development cast doubt on Mr. Biden’s renewed efforts to reframe the economy as a winning issue for him and his party before the midterms — though the president appeared unfazed.

Mr. Biden welcomed thousands of supporters to the White House lawn to toast the new law, which he said would help lower the cost of electricity, prescription drugs and other staples of American life.

The event was essentially a gathering for the so-called Inflation Reduction Actwhich raised taxes on large corporations, targeted nearly $400 billion in spending and tax incentives to reduce climate-changing fossil fuel emissions, and took steps to lower prescription drug costs for seniors on Medicare and the cost of insurance for Americans who buy health insurance through the Affordable Care Act.

Mr. Biden called the bill “the single most important piece of legislation passed in Congress to fight inflation and one of the most significant pieces of legislation in the history of our country.”

“This administration is writing an extraordinary story in America today,” Mr. Biden said, adding, “This bill has reduced costs for families and helped reduce inflation at the kitchen table.”

On Wednesday, Mr. Biden will head to the Detroit auto show to push his policies to promote manufacturing and low-emission energy sources.

But the economic reality of the country remains more tangled than Mr. Biden’s rosy message, as the inflation report underscored. Food prices continue to rise, which is especially troubling for families with lower incomes. The global economy is slowing sharply and the US recovery is at risk if European sanctions push millions of barrels of Russian oil off the global market in the coming months.

A potential rail strike could disrupt domestic supply chains. White House press secretary Karine Jean-Pierre told reporters on Tuesday that the president had convened union and company leaders on Monday in an attempt to broker a deal to avert a strike.

Most important — and perhaps most damaging to Mr. Biden and the Democrats — Americans’ wages are struggling to keep up with rapidly rising prices, an uncomfortable truth for a president who has vowed to make real wage gains the centerpiece of his economic agenda. Average hourly earnings adjusted for inflation The Labor Department said Tuesday that the economy picked up in August but remains nearly 3 percent lower than a year ago.

Republicans were quick to criticize Mr. Biden after Tuesday’s report. “Americans endure Biden’s economic crisis every day,” said Representative Blaine Luetkemeyer of Missouri, the top Republican on the Small Business Committee. “Democrat inflation continues to drive up costs and leave more and more small businesses and families questioning their future.”

How Times reporters cover politics. We rely on our journalists to be independent observers. Thus, Times employees may vote, but may not endorse or promote candidates or political causes. This includes attending marches or rallies in support of a movement or giving or raising money for any political candidate or election cause.

Mr. Biden and his aides do they celebrated the drop in gasoline prices on a daily basis throughout the summer. Those falling prices helped ease inflation from its highest point this year, though not enough to offset the rising cost of rent, food and other expenses last month.

While acknowledging the pain of rapidly rising prices across the economy, Mr. Biden touts progress in the fight against inflation, including signing the Energy, Health Care and Tax Act, which Democrats called the Inflation Reduction Act, last month. On Tuesday morning, he sought to put a positive spin on the August data, saying in a statement released by the White House that it was a sign of “more progress” in reducing inflation.

At his celebration Tuesday afternoon, Mr. Biden barely mentioned the word “inflation.” Instead, he talked about reducing health care and energy costs — and, to a much larger extent, the bill’s efforts to combat climate change.

Toward the end of the speech, he vigorously defended his administration’s economic record, including strong job creation, record-breaking small business creation and a resurgence in the manufacturing sector.

“And guess what?” Mr. Biden said. “Despite all the criticism I’ve received and the help you’ve given me with the price of gas – it’s down over $1.30 a gallon since the beginning of the summer.” We are making progress. We are also reducing other prices. We have more to do. But we’re getting there.”

Recent weeks have brought signs of hope for government officials, both among consumers and companies. The National Federation of Independent Business released its Small Business Optimism Index on Tuesday rose in August as the inflationary anxiety that continued to rebound from its depths this year eased. Federal Reserve Bank of New York reported on Monday that consumer inflation expectations also fell.

Administration and Federal Reserve officials say strong job growth and consumer spending this summer calmed fears that the country was slipping into a recession in the first half of the year.

“The most remarkable thing about where we are right now is the resilience of the labor market recovery, the resilience of American consumers and households, and that we are starting to see some signs that prices may be easing,” Brian Deese, director of Mr. Biden’s National Economic Council, said in an interview this week.

“There’s still a lot of work to do,” Mr Deese said. “But I think it’s a signal that the economic decisions that this president has made are bearing fruit.”

But surveys continue to show that inflation is hurting Mr. Biden and his party at a crucial time when Democrats are trying to retain control of the House and Senate. High prices are emerging as a top issue for voters in national polls, and Americans say they trust Republicans more than Democrats to handle inflation and the economy overall.

Stock markets posted their biggest daily loss in two years on Tuesday, driven by investor concerns about stubborn inflation pushing the Federal Reserve to raise interest rates higher and faster than many expected.

Economists on Wall Street and in policy circles are debating whether the U.S. economy can achieve a so-called soft landing, with economic and job growth slowing to reduce inflation — but not slowing enough to put millions of Americans out of work. . Some, such as former Treasury Secretary Lawrence H. Summers, warned that the unemployment rate would have to rise significantly to reduce price inflation to historic levels.

Mark Zandi, chief economist at Moody’s Analytics, whose analyzes of Mr. Biden’s policy proposals are often backed by the White House, said on Twitter on Tuesday that “job and wage growth must slow sharply” to moderate rising prices in the services sector. “That’s up to the Fed, which has to raise rates to get jobs and wage growth down without depressing the economy.”

Tuesday’s inflation report, he added, “suggests that while it’s still doable, it won’t be easy.”

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