Biden Celebrates Economic ‘Progress’ Even As Inflation Remains Four Times Higher Than At The Beginning Of His Term

President Joe Biden recently announced that his administration has made significant progress in reducing inflation. However, inflation rates today remain between three to four times higher than when he took office. In February 2023, the Personal Consumption Expenditures Price Index had an inflation rate of 5.0%, down from the 7.0% rate in June 2022 but far above the 1.5% rate in January 2021. Similarly, the Consumer Price Index reached 6.0% in February 2023, compared to the 1.4% level in January 2021. While Biden praised the 30% decline in annual inflation since the summer of 2022, he ignored the overall rise in prices during his term.

Biden attributed the marginally lower inflation over the past several months to his administration’s efforts to reduce prescription drug costs and promote domestic manufacturing. He added that cutting American manufacturing and other critical programs American families count on would hurt the middle class and low-income households the most.

Real wages fell by 1.9% between February 2022 and February 2023, which disproportionately affects low-income households. Policymakers at the Federal Reserve have raised target federal funds rates over the past year to address the persistent inflationary pressures, leading to a 10% drop in the value of banks’ long-duration assets. Silicon Valley Bank was recently forced to sell long-term government securities and corporate bonds at a loss as executives sought to fund withdrawals.

Federal Reserve Chair Jerome Powell had announced that officials intended to continue raising the target federal funds rate, and a quarter-point rate hike was recently announced. In conclusion, even though Biden claimed some price level reductions, inflation remains a significant concern, with adverse effects upon low-income households and financial institutions.

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