(Nation World News) — US President Joe Biden is discovering that a president cannot explain, legislate, or simply wish for runaway inflation, one of the most corrosive forces in a market economy.
He is placing his confidence in the Federal Reserve to tame the overheated economy, with the central bank hoping to try to calm stock markets with aggressive interest rate hikes on Wednesday.
But your late intervention will do nothing to make the pain go away immediately.
That’s because high food prices and record gas bills represent an alarming crisis that affects all Americans, while hurting those who can least afford the rising cost of living.
Economic storms are particularly pervasive to individual and national morale as they are building in a nation that is already struggling to emerge from another period of unusually shared pain: once in a century. an epidemic.
And they differ from the more familiar concerns arising from a regular recession, when millions may lose their jobs but others may be left untouched. Every American who eats out or travels feels the pinch during this unpleasant period when everyone’s money rapidly disappears. And only adults who came of age in the 1970s and 1980s always have any experience of the disorienting sense of running to catch up, as the cost of everyday living continues to rise almost every day.
Beyond the Washington blame game, the bigger story lies in the despair playing out outside the capital, where families are cutting grocery bills and using a portion of their wages just to go to work.
That disappointment translates into very real political consequences. The universal nature of the consequences of high inflation and the inability of Biden or the Fed to turn it around quickly make it a rare and difficult challenge to the party in power.
Biden can only deliver so many speeches that his failure to change the dynamic before he identifies the plight of families affected by high prices leaves his words hollow.
And with his White House insisting for months that inflation was a temporary and one-time post-Covid-19 side effect, and the Fed was slow to address the rising superstorm of inflation, the government’s credibility is deeply questioned. .
If he didn’t predict the problem, why should Americans believe he can fix it?
Every day brings more headaches to the White House. Consumer confidence is at its lowest level since a major survey by the University of Michigan began collecting such data in 1952. Stocks, a cornerstone of retirement savings for many Americans, have fallen into a bear market, eroding all gains they have. accumulated since the presidency took over. And Biden’s approval rating suggests he is getting the blame and comparisons to another Democrat, Jimmy Carter, whose presidency was partially disbanded because of inflationary nightmares, are not out of the question. It is possible
Questions about whether the White House understands the economy
Earlier this month Treasury Secretary Janet Yellen admitted she was wrong about inflation after failing to predict external factors such as the war in Ukraine and supply chain delays, but her remarks raise questions about why. Is the administration looking at the future clearly now.
While the Fed is expected to raise an emergency interest rate hike of three-quarters of a percent on Wednesday, many economists fear that its earlier slowdown now to curb rising prices could force the economy into recession. ,
The high interest rate strategy won’t be painless for Americans either. For example, it will be more expensive to borrow to buy a car or house.
The unbearable economic climate has left Biden in a particularly unacceptable political position and offered an opportunity for Republicans who are pushing for a higher cost of living ahead of November’s midterm elections. The president made another attempt on Tuesday to convince the country that he has got it and that reducing inflation is his first priority.
“So there’s more gas and there’s more food, which we’re going to get through thick and thin,” Biden said while addressing unions in Philadelphia. “Inflation: It’s draining the strength of many families,” he acknowledged.
But inflation and gasoline prices, often driven by forces beyond the president’s control, seem impotent, always a threat to the commander-in-chief. And the cycle of inflation puts Democrats in a vulnerable political position with only five months left before the midterm election. Similarly, Biden’s words on Tuesday about steps he has taken to save the economy, such as the US rescue plan, which helped get millions of Americans back to work after the pandemic, and his bipartisan infrastructure bill, came to voters. Beaches get a lot of traction. Struggling to fill up your gas tanks.
And while Democrats, pointing to a strong job market, argue that the economy is actually doing well, when millions think they’re struggling, they fall out of touch. For example, White House press secretary Karine Jean-Pierre had some justification this week in saying that Americans were “well equipped” to deal with current challenges, including gasoline that averages US$5 per dollar. gallons and inflation is 8.6%. Months ending in May. But the argument starts off in a way that even the most incompetent political opponent can easily take advantage of.
The nuanced arguments presented by the White House about how the administration has actually presided over a remarkable economic renaissance are also jarring.
For example, Brian Deez, director of the National Economic Council, acknowledged in an interview with Nation World News’s Victor Blackwell on Tuesday that there were “real challenges,” including higher prices.
But he insisted: “We are moving from the strongest economic recovery in modern American history to a period of more stable growth where we don’t have to sacrifice all those economic benefits.”
Inflation may worsen the economic situation
For grieving Americans and Biden’s political number crunchers, there is little chance of quick relief. The shock in oil prices caused by the war in Ukraine and the prospect of a ruined crop in one of the world’s main breadbasket countries, could create new problems in the coming months.
As prices rise, there is likely to be even greater scrutiny of whether the policies of the Biden administration were partly to blame. When inflation was evident from the pandemic’s supply chain lockdowns, the closure of manufacturing bases in Asia, and the reopening of the United States due to a sudden surge in demand and shortfalls in supply, it was credible to say that the health crisis was largely was responsible . Similarly, Biden’s success in turning Western nations into a menu of punitive sanctions that has cut Russian energy from global markets was partly attributable to rising oil prices.
But at the same time, early in his presidency, Biden pumped trillions of dollars into the economy in his pandemic rescue package and infrastructure spending, which is now coming under much closer scrutiny. Former Treasury Secretary Larry Summers had warned for months that his fellow Democrats in the White House, as well as the Federal Reserve, were complacent about the risk of inflation. He suggested that big stimulus programs could overheat the economy. Now it seems he was right. His current approach does not provide much comfort to the White House either.
“I think when inflation is as high as it is now, and unemployment is as low as it is now…” Show. this Sunday.
“I look at what’s happening in the stock and bond markets. I look at where consumer sentiment is. I think there’s definitely a risk of a recession next year.”
Meanwhile, despite its proven inability to predict the economic future at unprecedented times, the White House holds to its most optimistic forecasts. Biden is doing what he can. His decision to visit Saudi Arabia next month, a nation he once called a pariah for the murder and dismemberment of dissident and Washington Post columnist Jamal Khashoggi, is driven by the kingdom’s desire to reduce gasoline prices at home. To extract more crude oil. ,
In his speech on Tuesday, Biden criticized Republicans for blocking programs that would lower the cost of health care, energy and education and reduce the overall financial burden on Americans, even though his plan failed in the Senate. , were worried about a member of his own party. Joe Manchin of Inflation, West Virginia.
Biden is also blowing up political smoke by attacking Big Oil’s profits and demanding that corporations pay their fair share in taxes. And he is calling on Americans to be patient after years of national crisis.
“I truly believe that we have made extraordinary progress in laying a new foundation for our economy, which becomes evident as global inflation begins to decline,” Biden said on Tuesday.
The problem is that millions of Americans still don’t see it with their own eyes.