‘Out of Touch’ Biden Faces Heat From GOP for Downplaying Inflation Data That Roiled Markets
07:34 GMT 14.09.2022 (Updated: 13:18 GMT 14.09.2022)
After the US Bureau of Labor Statistics released its monthly Consumer Price Index (CPI) report on 13 September, showing inflation had remained high, the New York Stock Exchange (NYSE) took a dive, with the Dow Jones Industrial Average dropping 3.9 percent, one of its worst falls since June 2020.
Despite continued reports of higher-than-expected inflation raging in the US, President Joe Biden urged Americans on Tuesday not to worry and argued that things are “going to be fine". The Republicans were quick to accuse the White House of being out of touch with reality.
Inflation data had roiled markets on 13 September, with the New York Stock Exchange (NYSE) suffering one of its worst losses in recent memory as the latest Consumer Price Index (CPI) triggered an investor sell-off. As the CPI data revealed that inflation in August was 8.3 percent higher than a year ago, the S&P500 dropped 4.3 percent, the Dow Jones Industrial Average was off 3.9 percent, and the Nasdaq Composite plummeted 5.2 percent. In the wake of these developments, the US Federal Reserve is expected to make its biggest increase in interest rates when it meets next week: a full percentage point, or 100 basis points.
However, Joe Biden appeared unfazed by the data when he was asked whether he was worried about inflation, telling reporters in Delaware:
“I’m not, because we’re talking about one-tenth of one percent.”
“The stock market doesn’t necessarily reflect the state of the economy, as you well know. The economy is still strong. Unemployment is low. Jobs are up. Manufacturing is good. I think we’re going to be fine,” Biden added.
Earlier in the day, Biden said the latest data showed “progress” towards curbing inflation, acknowledging that more needed to be done to "bring global inflation down in the US economy".
US Stocks Collapse After High Inflation Report, Dow Loses 1,276 Points in Worst Day Since June 2020
13 September 2022, 20:01 GMT
GOP: Dems ‘Out of Touch’
As markets plunged, Biden did not mention the latest inflation data at all during his speech at a party-like celebration on the lawn of the White House on 13 September. The event was to unveil his signature climate-and-tax law - the Inflation Reduction Act. The Biden administration has applauded the Bill for its provisions on lowering the cost of prescription drugs, combating the climate crisis, reducing the federal deficit, and raising taxes on billion-dollar corporations.
Tackling inflation before the November mid-terms has been the Democratic POTUS’ top priority. However, the Bill may fail to make a dent in record-breaking inflation in the near future, according to a report by the Congressional Budget Office (CBO) which estimated that it would have a “negligible effect on inflation” in 2022.
Biden’s economic policies were yet again scathingly criticized by Republicans.
“They could not look more out of touch if they tried,” Senate Minority Leader Mitch McConnell said on Tuesday.
“Biden and Democrats throwing themselves a party for raising taxes on families during a recession proves just how out of touch they are,” Republican National Committee Chairwoman Ronna McDaniel outlined in a statement.
Biden and the Democrats have been fighting the headwinds of raging inflation before the 8 November mid-term elections.
All 435 seats in the House of Representatives and 35 Senate seats are up for grabs. Democrats at present have narrow majorities in both chambers of Congress, and have been trying to boost their chances for retaining control of at least one as they ease price pressures. After exceeding $5 a gallon for the first time in history on 14 June, US gasoline prices have been on a downward trajectory. Biden ordered a historic release of barrels of crude from the Strategic Petroleum Reserve to lessen the damage on consumer wallets at the gas pump. The $700Bln climate, health and tax Bill, the Inflation Reduction Act, signed by Biden on 16 August after it received party-line votes in both the House and Senate, has also been touted as a legislative victory.
13 September 2022, 17:30 GMT
However, forecasts from pollster FiveThirtyEight suggest that the Republicans will win the House in 74 outcomes out of 100, and the Democrats will keep the Senate in 69 outcomes out of 100. The Economist appears to offer similar forecasts.
Meanwhile, Biden's public approval rating remains close to the lowest level of his presidency, according to a Reuters/Ipsos opinion poll completed on Tuesday. When asked, only 39 percent of Americans approved of the way Biden was doing his job.