Inflation worries President Biden
The specter of inflation hangs over the corridors of the West Wing, and every attempt by the Biden administration to exorcise the price-gouging poltergeist only deepens its grip.
The latest Consumer Price Index (CPI) report shows that inflation is accelerating at an alarming pace. After the monthly annual rate of increase in CPI fell below 2% in October and November. inflation rate has skyrocketed Since then, it has gotten even hotter every month.
The inflation rate rose at an annual rate of 2.8% in December. This accelerated to 3.7% in January. In February, it reached 5.4%. The consumer price index rose at an annual rate of 4.6% in March, the latest figures available.
Economists like to say you should look at monthly numbers to spot underlying trends. Unfortunately, the news here is not so good.of The three-month annualized increase in CPI was 4.6%. The rate was 3.2% in March and 3.2% for the six months, clearly indicating that the inflation trend is further strengthening. The three-month annualized rate of core inflation is only slightly lower at 4.5%, but the six-month average is 3.9%.
Many politically progressive analysts argue that shelter prices distort the picture because rent changes are slow to be calculated into the consumer price index. But eliminating shelters will not improve the situation. On the other hand, if you convert it into a 3-month year, Inflation for key services (excluding shelter) is 7.8% I finally counted. The annualized monthly rate for March was 8.5%.
Next week’s inflation rate is likely to be scary.
Next week, the Labor Department will release the Consumer Price Index for April.of Cleveland Fed’s CPINnow is forecast to increase by 0.41% month-over-month, which would be an annualized increase of about 5%. This will accelerate from March’s 0.38%. This also results in a three-month annualized increase of approximately 5%.
Core inflation does not include gasoline prices, which skyrocketed in April, so it should be a little lower. The Cleveland Fed’s nowcast shows an increase of 0.31%, or an annualized rate of increase of 3.78%.of The annualized increase rate for the three-month period is 4.2%.
If the nowcast is about right, April’s CPI data will not give the Fed confidence that inflation is on target. Rather, it is likely to be interpreted as further evidence that inflation is entrenched at high levels. at least, Currently released numbers suggest the Fed will have to wait even longer before cutting rates..
The market is currently pricing in November as the earliest chance of a rate cut, and while the odds favor a December rate cut, it doesn’t make much of a difference. If the Fed cuts interest rates in November, it is likely that they will be suspended in December rather than cutting further. So, This year I’m only watching single cuts at most..
An unexpected pick-up in inflation would likely mean no rate cuts later this year or even at the January 2025 meeting. If that happens, the earliest rate cut would be delayed until March.But perhaps the market will start The Fed is seriously considering raising interest rates. When the Fed determines that inflation is too high to cut interest rates.
Increasing political costs due to inflation
this is Big question for Biden’s re-election chances. The White House was hoping the Fed would back up its message that inflation was falling and the danger of inflation was over with rate cuts. Now that possibility is very low.
The public is paying close attention to the issue of inflation.Latest polls from economist And according to YouGov, inflation is by far the leading issue, with 22% of people saying it is the most important issue to them. After inflation, “employment and the economy” was cited at 11%, followed by immigration at 11%. 77% of people say inflation is a very important issuemore than any other issue.
When asked how much inflation had affected them personally, 58% said it had affected them “a lot.” Another 38% said “somewhat.” Only 4% of people say they have never experienced inflation in their lives.
61% of Americans say they disapprove of Biden’s handling of inflation, including 48% who strongly disapprove. Only 10% of Americans said they strongly support Biden on the issue of inflation.
Concerns about inflation are not a partisan issue, but Republicans are more concerned than Democrats.of economist/YouGov poll found that 64% of Democrats support 76 percent of independents, 91% of Republicans say inflation is a very important issue. Less than 5 percent of political persuasions say it’s not important or very important.
(License/Getty Images)
Biden supporters point to a strong labor market to further the president’s economic performance. But polls show this rings hollow for most voters. When asked to rank the relative importance of inflation and unemployment, only 3 percent said unemployment was more important. 57% say inflation is more important, 37% rank them equally. Even among Democrats, only 5% say they value unemployment more, 55% say they value inflation more, and only 5% rate them equally. It was 33%.
Historically, when inflation spikes, incumbent companies face a steep slope. Voters do not vote in summary. They vote on the intuitive reality of everyday life. Dissatisfaction grows when their money buys less than it did yesterday. Biden’s team is undoubtedly aware of this historical precedent. The challenge they face is not just stopping inflation, but communicating effectively about what has been and is being done to address inflation.
Biden gave an interview this week. CNN’s Erin Burnett. The results were dire. “No president has ever done a better job of creating jobs and lowering inflation,” Biden said.
But Americans don’t think inflation will fall any further.of economist/A YouGov poll found that 44 per cent of people expect inflation to rise in six months, 25 per cent expect inflation to stay around current levels and just 15 per cent expect inflation to fall. Percentage.
clock:
Even Democrats can’t muster much enthusiasm for inflation. A quarter expect inflation to rise, 31% expect the same rate and 27% expect it to fall.
Biden too failed to limit his comments on inflation to the limits of reality.
“When I came into office, it was 9 percent. 9 percent,” Biden said.
it was actually 1.4 percent When Biden became president. Even though he has been president for nearly a year and a half, that percentage has risen to just 9%.
this kind of A gentle approach to the truth about inflationWhether it’s due to forgetfulness or deliberate lies, it’s unlikely to significantly increase voter confidence between now and Election Day.
