Inflation Takes Biden and the Democrats to Deeper Waters

The White House is facing another grim inflation report. This could threaten both President Biden’s broad social spending bill, and Democrats’ prospects in the midterm election.

According to the Labor Department, December saw a 7 percent increase in consumer prices compared with the same month last year. This is the fastest price rise in almost 40 years, as the U.S. economy recovers from the unprecedented COVID-19 pandemic.

“It was an ugly report. But I think we’re past the worst of it. We’re pretty close to past the worst of it,” said Mark Zandi, chief economist at Moody’s Analytics. 

The White House has been unable to communicate its message of a strong economic recovery following the pandemic. Last month, the unemployment rate fell to 3.9%.

Officials at the White House noted recently that December’s inflation rate was lower than in the previous two months. This is evidence that it may be slowing down.

“We saw a welcome deceleration in the rate of price increases in a number of respects,” White House National Economic Council Director Brian Deese told reporters, while claiming that the data is “moving in the right direction.” 

The pace of increases in food prices at home has slowed, and gas prices have actually fallen. Biden said in a statement to show that his administration is making progress towards reducing the rate of price rises.

“Politically, the fact that gas prices are falling, not rising, is really good news. Economically, most economists look through movements in gas prices when they try to assess what’s going to happen going forward,” said Jason Furman, who chaired the Council of Economic Advisers under the Obama administration.

Economists believe that inflation will fall significantly over the next year. However, consumers will likely feel its effects for several more months. This could be a problem for Democratic incumbents as they try to retain their narrow majority in Congress.

“The inflation sting is still going to be hurting come November, even though it will be down a lot,” Zandi added.

The U.S. Chamber of Commerce has been using the data to strengthen their argument in opposing Biden’s Build Back Better Bill.

“Today’s numbers are a reminder that we need policymakers focused on combating inflation. That means avoiding policies, like the current so-called Build Back Better Bill that will fuel greater near-term price increases. Instead policymakers should pursue policies that will reduce inflationary pressures, including addressing the worker shortage crisis, expanding trade, and reducing tariffs,” said Suzanne Clark, Chamber president and CEO.

Previous post NFT and Crypto Are America’s Hottest Political Campaign Trend
Next post Trump on Rep. Katko Not Seeking Reelection: ‘Another One Bites the Dust’