President Biden’s message downplaying the latest inflation numbers is out-of-touch, according to experts who warn that his remarks make the administration appear unrelatable to most Americans.
Annual inflation hit 9.1 percent in June, the highest rate of price growth since November 1981, despite recent interest rate hikes from the Federal Reserve. Consumer prices rose 1.3 percent last month alone, driving up the costs Americans face to get groceries and fill up their gas tanks.
Biden acknowledged in a statement after the report’s release that inflation remained “unacceptably high” but then downplayed the significance of the new data, calling it “out-of-date” because it does not reflect the decline in gas prices not captured in the June report.
Experts warned that Biden’s message may prove ineffective to most of the public.
“Biden’s response to the inflation report this morning might have been a little tone deaf,” said Derek Tang, co-founder of Monetary Policy Analytics, in a Wednesday interview.
“Telling them this release is out of date because it doesn’t have the latest data is not really going to be well received as a message,” he continued.
Gas prices have come down since the spike in the price of oil last month, which was responsible for almost half of the total June inflation surge. Biden in his message highlighted those savings as “providing room for American families” while also noting the price of wheat had also come down and was not reflected in the report.
Neil Bradley, chief policy officer at the U.S. Chamber of Commerce, said the out-of-date messaging strategy from the White House doesn’t get to the real issue.
“Whether it’s 8 percent or 9 percent, both are too high and the real issue isn’t the time frame of the data,” he said. “The real issue is that we have intense inflationary pressures and while the Fed is doing their part on the demand side, we really need policymakers to do their part on the supply side and frankly that just isn’t happening.”
Oil and wheat prices were not the only forces pinching American households in June. Prices for almost everything other than airplane fares and hotel rooms rose at faster rates in June, too, and have shown few signs of slowing down.
Inflation outside of the food and energy sectors hit 0.7 percent in June and 5.9 percent over the past 12 months, according to the CPI report, and shelter prices rose 0.6 percent last month. Motor vehicle repairs, dental service fees, health and auto insurance prices all rose roughly 2 percent each.
“The June CPI numbers were horrible. The next question is whether they will be repeated over the next few months,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a Thursday analysis.
Biden has few easy options to tame high inflation, a global problem driven only in part by the trillions of dollars of fiscal stimulus he deployed in March 2021. A series of supply shocks due to the COVID-19 pandemic and war in Ukraine also forced prices higher, catching the Federal Reserve largely off-guard, which pushed the bank into a series of rapid rate hikes.
“Voters want to see proactive and not reactive leadership. They want to know what policy makers are doing to help them better afford their next trip to the grocery store or afford their trip home from work,” said Rachel Snyderman, senior associate director of economic policy at the Bipartisan Policy Center.
She also argued that because high inflation started last fall, a decline will be incremental so inflationary pressures are going to be felt for months. That won’t bode well for Biden in a pivotal midterm election for Democrats in November.
Biden’s sinking approval rating has also recently showed that a plurality of voters – 42 percent – blame him for the current state of the economy. And this week, support for Biden’s reelection in 2024 reached record-lows even among Democrats.
Economists also see the risks of recession growing as the Fed ramps up its rate hikes to slow price growth.
Biden has called on Congress to help combat inflation by passing legislation this month intended to lower the cost of prescription drugs and health insurance. That legislation, which the White House is now deeming the “anti-inflation reconciliation bill” is a slice of the president’s signature Build Back Better agenda that failed in the Senate earlier this year.
Bradley at the Chamber criticized the legislation as the same Build Back Better agenda, which largely failed due to concerns over its impact on inflation.
“This is the same agenda, the original defense for this agenda had nothing to do with inflation so it really is an attempt to basically bolt a new reason onto a preexisting agenda,” he said.
Republicans are meanwhile leaning into the impact on everyday consumers and that inflation is showing no signs of slowing down.
“Inflation is raging for Main Street businesses, and that means higher prices ahead for consumers,” the top Republican on the House Ways and Means Committee Rep. Kevin Brady (Texas) said this week, adding that months of high inflation “translates into higher prices and no relief anytime soon for consumers.”
Biden and Democrats counter that inflation is high across the world, but few nations have recovered as quickly as the U.S. The American economy has recovered all of the roughly 21 million jobs lost to the onset of the pandemic and gained 2.7 million jobs in 2022 alone. The unemployment rate is also 3.6 percent, just 0.1 percentage points above its level before the onset of the pandemic.
Economists say the resilience of the U.S. economy is a mixed bag for the fight against inflation.
Job growth and consumer spending still rising in the face of high inflation is a sign the U.S. may be well equipped to handle rising interest rates. But the steady spending and intense need for labor that have propelled job gains is also adding more fuel to inflation.
Snyderman said in terms of the economic toolbox, it comes down mostly to the Federal Reserve. Biden has consistently said he will give the Fed the room it needs to help it combat inflation.
“We’re still going to be looking to the Federal Reserve and future interest rate hikes to see how those will affect the broader macro economy,” Snyderman said.
“When it comes to other policy issues that are going to generate voter turnout, it’s hard to predict right now where inflation will rank among those. I think it’s very safe to say it will remain a top issue in the next few months.”
Source: The Hill