Persistent Inflation Threatens Biden’s Agenda


WASHINGTON — A team of President Biden’s top advisers meets at Zoom at least once a week to address the nation’s problems. supply chain crisis. They discuss ways to lighten the backlog in America’s ports, ramp up semiconductor production for struggling automakers, and inflate the ranks of America’s truck drivers.

The talks are geared towards one goal: taming the accelerating price hikes that hurt the economic recovery, upset American consumers and undermine Mr. Biden’s popularity.

The rise in inflation presents a new challenge for Mr. Biden, who has insisted for months that rising prices are a temporary remnant from the pandemic recession and will quickly pull back. Instead, the president and his aides are poised for high inflation to continue into next year, as Americans continue to see faster—and sustained—rises in the prices of food, gasoline, and other consumer goods. at any point in this century.

This fact is Mr. Biden’s comprehensive legislation increasing workers, expanding access to education and tackling poverty and climate change. And it’s dragging the president’s approval ratings, which is may threaten Democrats are already holding Congress weak in the 2022 midterm elections.

Recent polls show that Americans’ concerns about inflation have eroded their economic confidence and darkened their views on Mr. Biden’s performance. national surveys by CNBC and Fox News It shows a sharp decline in voter scores regarding Mr Biden’s overall performance and handling of the economy, although unemployment fell sharply under his watch and economic output reached its fastest rate since Ronald Reagan became president. Voters’ concerns about price increases have increased in the past month.

Administration officials responded by framing Mr Biden’s push for the spending bill he signed as an effort to cut costs facing American families, citing provisions to limit childcare costs and expand subsidies for higher education, among other plans. And they’ve mobilized staff to explore options to clog supply chains, bring more people back into the workforce, and reduce food and gasoline costs by promoting more competition in the economy. through executive actions.

“There are obvious challenges in turning the economy back on after the pandemic as we’ve brought together state and local officials, the private sector and labor to address it – so prices are falling,” said Kate Berner, the White House deputy director of communications. meeting.

Mr. Biden’s senior officials stress that the administration’s policies are helping to accelerate America’s economic recovery. Workers give orders biggest wage gains within two decades. Growth rebounded in the first half of the year, fueled by the $1.9 trillion economic aid bill the president signed in March. America’s expansion continues to outpace other rich countries in the world.

Inflation and scarcity are disadvantages of this equation. Auto prices are rising due to strong demand and a lack of semiconductors. Gasoline has reached its highest cost per gallon in seven years. A change in consumer preferences and pandemic congestion in supply chains have delayed shipments of furniture, appliances and other consumer goods. Millions of Americans who have saved money from government support through the pandemic are waiting to get back to work, increasing labor costs for companies and food prices in many restaurants.

Many of these are beyond Mr. Biden’s control. Inflation has risen In wealthy countries around the world as the pandemic hinders the movement of goods and component parts between countries. Virus-wary consumers have shifted spending on goods rather than services, travel and tourism remain stagnant, and energy prices have soared as demand for fuel and electricity surges amid business resumption and some climate-change-related weather shocks.

But some economists, including veterans of previous Democratic administrations, say much of Mr. Biden’s battle with inflation is self-inflicted. Lawrence H. Summers is one of those who said the president’s incentive bill was signed in March. gave a lot of support All the way to consumer spending at a time when disruptions in the supply chain are making it harder for Americans to get what they want to buy. Mr. Summers, who served in the Obama and Clinton administrations, says inflation now risks getting out of control, and other Democratic economists agree there are risks.

“The real sin was an oversized American Recovery Plan. It contributed to both higher output and higher prices,” said Jason Furman, a Harvard economist who chairs President Barack Obama’s White House Council of Economic Advisers.

This worries some key Democrats about the price-related downsides of the president’s ambitious spending package, complicating Mr Biden’s approach.

A centrist, Senator Joe Manchin III of West Virginia has repeatedly referred to rising inflation, insisting that Mr.

Mr. Biden has tried to argue that investments in the spending bill will smooth out price increases over time. But he struggled to determine what he could do right away. relieve pain high-profile price increases such as gasoline. Some under his administration forced the National Guard into action to help unclog ports nationwide full of imports waiting to be delivered to consumers. Mr. Biden has raised the possibility of utilizing the strategic oil reserve to modestly increase oil supply, or negotiating with oil producers in the Middle East to accelerate it.

At a CNN town hall last week, Mr. Biden acknowledged the limits of his power, saying “I don’t have an answer in the near term” to drive down gas prices, which he didn’t expect to start dropping until next year.

“It will happen in the meantime, I don’t see anything that would bring gas prices down significantly,” he said.

Treasury secretary Janet L. Yellen told CNN’s “State of the Union” on Sunday that she expects an improvement in the overall inflation rate “by the middle to the end of next year, in the second half of next year”.

With an American public going through nearly 40 years without seeing or worrying about inflation, the issue provides an opening for the opposition. Republicans changed price hikes It became a weapon against Mr. Biden’s economic policies, warning that spending more would only increase the suffering for ordinary Americans.

“It’s everywhere,” said Texas Representative Kevin Brady, the top Republican on the Methods and Tools Committee. “You can’t live your life without seeing your salary buy less.”

White House officials have been monitoring inflation pressures for months. They are convinced that, as in April, price increases won’t get out of hand and the Federal Reserve won’t cause spikes in interest rates that could curb growth.

The president and his senior advisers are confident that the price hike will start to drop long before the midterms. They argue for the extent of the bailout and say that Americans are currently focusing on inflation as the success of the stimulus bill accelerates economic and employment growth and removes a larger issue – the availability of jobs for the people who want them – off the table.

“Trying to evaluate the economy, and even people’s views on the economy, by looking at inflation alone, is pretty incomplete,” Jared Bernstein, member of Mr. Biden’s Council of Economic Advisers, said in an interview. “You should also appreciate the robustness of the expansion and how it has increased business and earnings opportunities.”

Mr. Bernstein and other advisers say many causes of inflation are already improving. They point to calculations by Moody’s Analytics economist Mark Zandi, who suggest that Americans leaving the workforce will start flowing back into the job market by December or January, probably because they’ve already exhausted their savings by then.

Consultants are also continuing to explore further action they can take, including efforts to increase the number of truck drivers near the port and push for lower prices and more competition in the food industry.

“We’re always in everything,” said Mrs. Berner.

Many officials add a caveat: It will take time for almost anything the White House can do right now to drive prices down.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *