Biden still faces persistent inflation issue.
Inflation Persists: Higher Shelter and Energy Prices Drive Up Inflation to 3.7% in September
Despite being far from our minds at the moment, the inflation problem continues to linger. Year-over-year price hikes have remained steady at 3.7% for the year ending in September, while core inflation, which excludes food and energy prices, has fallen to 4.1%. Although these figures have decreased compared to a year ago, they still hover around double the Federal Reserve’s target of 2%.
Bidenomics vs. Bidenflation
President Joe Biden and other Democrats are hailing these numbers as a testament to the success of “Bidenomics,” while Republicans are using them as evidence that “Bidenflation” is here to stay.
“This morning’s report shows core inflation fell to its lowest level in two years,” Biden stated. “Overall inflation has decreased by 60% from its peak, even as unemployment has remained below 4% for 20 consecutive months and the percentage of working-age Americans in the workforce is the highest it has been in 20 years. That’s Bidenomics in action.”
On the other hand, Alfredo Ortiz, CEO of the Job Creators Network, blames the “reckless spending by the Biden administration and Congressional Democrats” for the inflation and asserts that ordinary Americans are becoming poorer. He calls for government spending cuts to address the issue.
Stuck at 4%: The Battle Over Causes
Inflation stood at a mere 1.4% when Biden took office, but it quickly surged to 5% by May and peaked at a staggering 9.1% in June 2022. Since then, it has remained stubbornly around 4%, refusing to fall closer to the 2% target. Republicans attribute this inflation to the American Rescue Plan, a $1.9 trillion stimulus bill passed in March 2021 without any GOP votes. Democrats, however, argue that rising prices globally indicate that the issue extends beyond U.S. policy decisions.
Gerald Friedman, an economics professor at the University of Massachusetts, believes that the current 4% inflation rate is manageable. He expresses more concern about international events disrupting the economy than the need to reach the 2% target. Friedman points out that the Israel-Gaza conflict or a disruption in oil production, similar to the 1973 Yom Kippur War, could have significant impacts.
Biden’s Focus on the Economy
Despite the dominating news coverage of recent terrorist attacks, President Biden has not stopped addressing the economy. He has discussed protecting consumers from “junk fees,” met with business CEOs to discuss economic matters, and is scheduled to deliver a speech in Philadelphia about how the “Bidenomics agenda” is creating union jobs, improving infrastructure, and promoting clean energy to combat climate change.
However, if inflation persists by this time next year, Biden may shift the focus away from it and onto the GOP. Republicans had predicted a “red wave” in the midterm elections when inflation surpassed 9% in the summer of 2022. Instead, Biden concentrated on criticizing “ultra-MAGA” Republicans and highlighting the threat they posed to democracy. This, along with the aftermath of the Supreme Court’s decision to return abortion policy to the states, helped the Democratic Party exceed midterm expectations.
Republicans Keep the Heat on the Economy
Republicans will continue to target the economy as long as it remains a weak spot for President Biden. According to RealClearPolitics, Biden’s average economic approval rating is approximately net negative 24 percentage points, with an average of 45% of respondents believing that the country is heading in the wrong direction.
Although the year-over-year inflation figure may no longer be shocking, Republicans are betting that voters have a memory that stretches back further. Ortiz emphasizes, “It’s important to remember that since President Biden took office, prices have increased by around 20%, reducing Americans’ real wages and living standards.”
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Democratic strategist Michael Stratton dismisses Republican attacks on the economy as a desperate attempt during an election campaign. He describes the claim that prices have increased by 20% as one of the most contrived analyses he has ever heard.
How does President Biden believe infrastructure investments, education, and healthcare will strengthen the long-term prospects of the American economy?
Taken his focus away from the economy. His administration continues to emphasize its commitment to addressing inflation and ensuring economic stability.
During a recent press conference, President Biden acknowledged the persistent inflationary pressures but expressed confidence in his administration’s policies. He highlighted the success of the American Jobs Plan and the American Families Plan in promoting job creation and economic growth. Biden emphasized the importance of investing in infrastructure, education, and healthcare to strengthen the long-term prospects of the American economy. He also highlighted the need to address supply chain disruptions and bolster domestic manufacturing capabilities to mitigate inflationary pressures in the future.
In addition to infrastructure investments, the Biden administration is also working on measures to increase competition and lower prices in key sectors, such as healthcare and pharmaceuticals. The president has been advocating for the approval of legislation that would allow Medicare to negotiate drug prices, which he believes will help lower healthcare costs for American families.
Furthermore, the Federal Reserve, under the leadership of Chairman Jerome Powell, has been closely monitoring inflation and taking necessary measures to ensure price stability. The Fed has indicated its willingness to adjust monetary policy as needed to achieve its inflation target of 2%.
Despite differing opinions on the causes and solutions to inflation, both Democrats and Republicans recognize the need to address the issue. Inflationary pressures can erode the purchasing power of consumers, particularly those with fixed incomes. Higher prices for shelter and energy can also have a disproportionate impact on low-income households.
As the Biden administration continues to pursue its economic agenda, it remains to be seen how successful its policies will be in mitigating inflationary pressures. The focus on long-term investments, job creation, and increasing competition in key sectors is a step in the right direction. However, it will require coordination and cooperation from both sides of the aisle to effectively tackle the issue of inflation and ensure economic stability for all Americans.
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