WASHINGTON—President Biden met with top Democrats at the White House on Tuesday, at an inappropriate moment, to celebrate their inflation struggle.
August’s CPI report contained a slew of unwelcome news for a president trying to quell Republican attacks on rising prices ahead of the November midterm elections. Inflation has not cooled as White House economists and other forecasters had hoped, and prices rose faster than wages last year, suggesting workers were losing purchasing power.
Another report from the Census Bureau found that the typical American household saw a slight drop in inflation-adjusted income from 2020 to 2021. Last year showed that income inequality widened for the first time in a decade.
These developments challenged Biden’s renewed effort to rebuild the economy as a winner-take-all issue for himself and his party before the midterm elections — and the president appeared unfazed.
Mr. Biden welcomed thousands of his supporters to the White House lawn to toast new legislation that he says will help reduce the cost of American basics like electricity and prescription drugs.
An event is essentially a so-called Inflation control lawwill raise taxes on large corporations, target nearly $400 billion in spending and tax incentives to reduce climate change-causing fossil fuel emissions, and reduce Medicare prescription drug costs for seniors. and took steps to reduce premium costs for Americans who purchase health insurance through Medicare. Affordable care method.
Biden called the law “the most important law passed by Congress to combat inflation and one of the most important laws in our nation’s history.”
“This administration has written an amazing story in America today,” Biden said, adding that “this bill has helped cut costs for families and keep inflation down on the kitchen table.” .
On Wednesday, Mr. Biden will head to the Detroit auto show to endorse policies that strengthen manufacturing and low-emission energy sources.
But as the inflation report underscores, the economic reality of the country remains more turbulent than Mr. Biden’s optimistic message. Food prices continue to rise, especially for low-income households. The global economy is decelerating rapidly and the threat to the US recovery remains if European sanctions force millions of barrels of Russian oil out of global markets in the coming months.
2022 midterm elections
With the primaries over, both parties are beginning to shift focus to the November 8 general election.
A possible rail strike could disrupt domestic supply chains. White House press secretary Carine Jean-Pierre told reporters on Tuesday that the president called union and business leaders on Monday to broker an agreement to avoid a strike.
Most importantly, and perhaps most detrimentally for Biden and the Democrats, American wages are struggling to keep up with rapidly rising prices. Inflation-adjusted average hourly earnings The Labor Department said on Tuesday that the overall economy rose in August but remained down nearly 3% from a year ago.
Republicans were quick to criticize Mr. Biden after Tuesday’s report. “Every day, Americans endure a Biden economic crisis,” said Blaine Lütkemeyer, a Missouri congressman and Republican head of the Small Business Committee. “Democratic inflation continues to drive up costs, leaving more and more small businesses and families questioning the future.”
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Biden and his aides have celebrated lower gas prices on a daily basis over the summer. These price drops helped inflation ease from its high point this year, but they were not enough to offset last month’s rise in rent, food and other costs.
While acknowledging the pain of sharp inflation across the economy, Biden has made progress in fighting inflation, including last month signing into law what Democrats called the Inflation Reduction Act on energy, health care and taxes. claims to be. On Tuesday morning, he tried to shed a positive light on the August data, saying in a statement issued by the White House that it was a sign of “further progress” in lowering inflation.
At Tuesday afternoon’s gala, Mr. Biden barely mentioned the word “inflation.” Instead, he talked about cutting health care and energy costs, and even legislative efforts to combat climate change.
Near the end of his speech, he harshly defended the administration’s economic record, including strong job creation, record small business formation and manufacturing recovery.
“And what do you think?” Biden said. “Thanks to all the criticism I’ve received and your help the gas prices have brought, they’re down over $1.30 a gallon since early summer. We’re making progress. Other price cuts. Yes, we still have work to do, but we are getting there.”
The past few weeks have offered a silver lining to government officials, both among consumers and businesses. The National Federation of Independent Business reported Tuesday its Small Business Optimism Index. rose in august Inflation anxiety has eased, and the market has continued to rebound from the bottom this year.Federal Reserve Bank of New York reported on monday Consumer inflation expectations have also fallen.
Officials in the administration and at the Federal Reserve Board say this summer’s strong job growth and consumer spending have allayed fears that the country has slipped into recession in the first half of the year.
“The most notable thing about where we are right now is the resilience of the labor market recovery, the resilience of American consumers and households, and some of the things that prices may be slowing down. The signs are starting to appear, Biden’s National Economic Council said in an interview this week.
“We still have work to do,” Diess said. “But I think it’s a signal that the economic decisions this president has made are bearing fruit.”
But polls continue to show that inflation is hurting Biden and his party at a pivotal time as Democrats try to maintain control of the House and Senate. National polls show rising prices are the biggest problem for voters, with Americans saying they trust Republicans more than Democrats in handling inflation and the economy as a whole.
On Tuesday, the stock market posted its biggest daily loss in two years. This is driven by investor fears of stubborn inflation, which is forcing the Federal Reserve (Fed) to raise interest rates faster and higher than many expected.
Wall Street and policy economists debate whether the U.S. economy can achieve a so-called soft landing, with economic and job growth slowing to keep inflation under control.Former Treasury Secretary Lawrence H. Some, like Summers, have warned that unemployment will need to rise significantly to bring inflation down to historic levels.
Mark Zandy, chief economist at Moody’s Analytics, whose analysis of Biden’s policy proposals is often driven by the White House, tweeted on Tuesday that he would “employees” to keep prices in the services sector in check. And wage growth must slow sharply.” “This is up to the Fed, who must raise interest rates to keep employment and wage growth in check without hurting the economy.”
Tuesday’s inflation report “suggests it’s still doable, but not easy,” he added.