But his late intervention will do little to relieve the pain immediately.
That’s because soaring food prices and record-breaking gasoline bills represent a pernicious crisis that is plaguing all Americans, while hurting those who can least afford the rising cost of living.
Economic storms are particularly hard-hitting for personal and national morale as they batter a nation already struggling to emerge from another period of unusually shared pain: a once-a-century pandemic.
And they are different from the more familiar anxieties brought on by a regular recession, when millions of people may lose their jobs but others may remain untouched. Every American who eats or travels feels the pinch in this unpleasant time when everyone’s money is disappearing faster. And only adults who came of age in the 1970s and 1980s experience the disorienting feeling of always running to catch up when the cost of daily living seems to rise almost every day.
Beyond Washington’s blame game, the bigger story is the frustration unfolding outside the capital, where families are cutting supermarket bills and using part of their wages just to commute at work.
This frustration translates into very real political consequences. The universal nature of the consequences of high inflation and the inability of Biden or the Federal Reserve to quickly address them make it a rare and intractable challenge for the ruling party.
And given that his White House insisted for months that inflation was a one-time, temporary post-Covid-19 side effect, and that the Fed was slow to weather the oncoming inflationary storm, credibility government is deeply questioned.
If he didn’t foresee this problem, why should Americans believe he can solve it?
Questions about the White House’s understanding of the economy
With the Fed set to make an emergency three-quarters percentage point hike on Wednesday, many economists fear its earlier restraint could now force it to plunge the economy into a recession to stem the surge. prices.
A higher interest rate strategy will not be painless for Americans either. It will become more expensive, for example, to borrow to buy cars or houses.
The nasty economic environment has left Biden in a particularly unenviable political position and offered an opening for Republicans, who are hammering away at the high cost of living ahead of November’s congressional election. The president made another attempt on Tuesday to convince the country that he is getting it and that reducing inflation is his number one priority.
“So the gas is up and the food is up whether we’re going to hell or flood,” Biden said, speaking to unions in Philadelphia. “Inflation – it saps the strength of a lot of families,” he admitted.
But given that inflation and gas prices are driven by forces often beyond the president’s control, he seems helpless – always a danger for a commander-in-chief. And the inflationary cycle puts Democrats in a weak political position just five months from the midterm elections. Likewise, Biden’s recitation on Tuesday of measures he’s taken to save the economy — such as the US bailout, which helped millions of Americans get back to work after the pandemic, and his bipartisan law on infrastructure – is unlikely to get much traction among voters who struggle to get gas.
The nuanced arguments advanced by the White House about how the administration actually presided over a remarkable economic renaissance also seem divisive.
National Economic Council Director Brian Deese, for example, acknowledged in an interview with CNN’s Victor Blackwell on Tuesday that there were “real challenges,” including high prices.
But he insisted: “We are moving out of what has been the strongest economic recovery in modern American history for what can be a period of more stable growth, where we don’t have to sacrifice all those economic gains.
It could get worse
For miserable Americans — and Biden’s political number crunchers — there is little prospect of quick relief. Oil price shocks caused by the war in Ukraine and the possibility of a ruined harvest there, in one of the world’s major breadbasket countries, could cause further problems in the months to come.
As prices rise, there is also a need to take a closer look at whether the policies of the Biden administration were partly to blame. When inflation was clearly caused by supply chain blockages due to the pandemic, the closure of manufacturing bases in Asia and the sudden increase in demand and decrease in supply during the reopening of the America, it was credible to say that the health crisis was largely to blame. Likewise, Biden’s success in locking Western nations into a menu of punitive sanctions, which cut off Russian energy from world markets, was partly to blame for rising oil prices.
But at the same time, early in his presidency, Biden pumped trillions into the economy in his pandemic bailout and infrastructure spending, which are now under much greater scrutiny. thorough. Former Treasury Secretary Larry Summers has warned for months that his fellow Democrats in the White House, as well as the Federal Reserve, are complacent about inflation risk. He suggested that large stimulus programs could overheat the economy. Now it looks like he was right. Nor does his current outlook offer much comfort in the White House.
“I think when inflation is as high as it is right now and unemployment is as low as it is right now…it’s always almost followed within two years by…a recession “Summers said on “State of the Union” on Sunday.
“I’m watching what’s happening in the stock and bond markets. I’m watching where the consumer sentiment is. I think there’s definitely a risk of recession next year.”
In his Tuesday speech, Biden slammed Republicans for blocking programs that would cut health care, energy and education costs and ease the overall financial burden on Americans — even as his plan foundered in the process. Senate in the hands of a member of his own party worried about inflation, Joe Manchin of West Virginia.
Biden is also blowing political smoke by attacking the profits of huge oil companies and demanding that companies pay their fair share of taxes. And he implores Americans, after years of crushing national crisis, for patience.
“I truly believe we’ve made extraordinary progress in laying a new foundation for our economy, which becomes clear once global inflation begins to decline,” Biden said Tuesday.
The problem is that millions of Americans still don’t see this with their own eyes.