What’s Next? 'Bidenflation' Hits 40-Year High With POTUS' Approval Rating on Economy Falling
Inflation has been over the 5 percent mark for the sixth month in a row in the US, sparking controversy around its causes and the measures needed to slow it down. While the current administration blames the COVID-19 pandemic and supply chain crisis, Republicans and other opponents target President Biden’s broad spending initiatives.
The US Department of Labor reported on Friday that the annual inflation rate has met some of the more pessimistic projections and increased in November to 6.8 percent from 6.2 percent in October, breaking a nearly 40-year record.
At the same time, core inflation in the US, excluding food and energy prices, amounted to 4.9 percent, 0.5 percent in November alone. Food prices in the US in November rose by 0.7 percent, energy prices - by 3.5 percent. On an annualized basis, food prices rose 6.1 percent, while energy prices rose 33.3 percent.
US President Joe Biden, who has been criticized for the rising inflation, said that "price and cost increases are slowing, although not as quickly as we’d like." He also underlined the significant decline in energy prices.
“Half of the price increases in this report are in cars and energy costs from November. Since then, we have seen significant energy price reductions,” Biden said, adding that the prices would lower in the months ahead, as there is “a decline in used car prices on the wholesale market.”
The president also said that “jobs recovery is on track and setting records – with unemployment insurance claims falling to their lowest level in 50 years and nearly 6 million Americans back to work.”
10 December 2021, 15:02 GMT
Biden stressed that “economic growth is stronger here than virtually any other nation” and said he plans to further address the pandemic-related supply chain disruptions and push forward his controversial $1.75 billion Build Back Better initiative.
Meanwhile, Biden’s most recent approval rating indicates
there are serious doubts about the economic situation, as only 37 percent of responders said they are content with the way the current administration has handled the economy, with 56 percent saying they disapprove.
Build Back Better Plan For The Economy
The inflation rate once again has raised concerns over Biden’s Build Back Better bill, as budget spending would increase the federal deficit and worsen inflation rates by increasing the money supply in the economy and boosting demand even more.
29 November 2021, 21:16 GMT
The current administration has stressed that the spending is compensated by raised taxes
on Americans with more than $400,000 in income. Meanwhile, according to the independent Congressional Budget Office’s estimates issued last month, Biden’s legislation would add $367 billion to the federal deficit over the next decade, while the expected increase in federal tax income would reduce the deficit by $127 billion over the same period.
Biden’s plan was passed in the House of Representatives on 19 November by a 220-213 vote, but has yet to be approved in the Senate, as two conservative Democrats, Joe Manchin and Kyrsten Sinema, have expressed opposition to the bill.
“The unknown we’re facing today is much greater than the need that people believe in this aspirational bill that we’re looking at, and we’ve got to make sure we get this right,” Manchin said Tuesday. “We just can’t continue to flood the market, as we’ve done.”
What Is Wrong With Inflation?
If there is something that all analysts agree on, it's the complicated nature of inflation, with a number of different factors contributing, including the harm that the pandemic has caused to production worldwide, supply disruptions, the increased demand after easing restrictions and its changed pattern as people spend more time at home and prefer ordering goods rather than buying them in person.
Some economists, including White House economist Jared Bernstein, claim that the $1.75 social spending bill “has no impact on the kind of inflation we’re talking about right now.”
“It doesn’t make it better, it doesn’t make it worse,” he said. “What it does is, it eases long-term inflationary pressure — this is widely agreed upon — by increasing the economy’s productive capacity, by helping people find a way into the labor market, by lowering families’ costs for child care, for prescription drugs, for housing.”
He also opined that "actual" people’s incomes are about "$100 per month above where they were a year ago, and that has a lot to do with both the strong labor market and many of the relief measures that this president has signed into law."
At the same time, Biden has himself admitted that the record-breaking inflation has been triggered partly by his $1.9 trillion COVID-19 stimulus checks, adopted earlier this year.
“The irony is people have more money now because of the first major piece of legislation I passed. You all got checks for $1,400. You got checks for a whole range of things,” Biden said last month.
Apart from the $1,400 checks, families with children received payments of $300 and $250.