Inflation rates are soaring at the their fastest pace in decades according to new numbers released on Friday by the U.S. government.
“The Bureau of Economic Analysis’ personal consumption expenditure inflation measure climbed 3.6 percent in April from the prior year — the strongest reading in 13 years and more than the 3.5 percent gain that economists in a Bloomberg survey had expected,” The New York Times reported. “The core price index, which strip out volatile food and fuel prices, rose 3.1 percent in the year through April — the fastest pace since 1992. Prices rose 0.7 percent compared with the prior month, the biggest increase in two decades.”
The measure of inflation most watched by the Fed surges to the highest since 1992. U.S. personal consumption expenditure core price index: pic.twitter.com/jrM4U86JCl
— Lisa Abramowicz (@lisaabramowicz1) May 28, 2021
Larry Summers, a former official in the Clinton and Obama administrations, warned that Biden is “overdoing it” and that “the sense of serenity and complacency being projected by the economic policymakers, that this is all something that can easily be managed, is misplaced.”
“We’re taking very substantial risks on the inflation side,” Summers said. “The Fed’s idea used to be that it removed the punchbowl before the party got good. Now, the Fed’s doctrine is that it will only remove the punchbowl after it sees some people staggering around drunk.”
The new figures come as President Joe Biden is set to unveil a massive $6 trillion federal budget on Friday that will face a tough uphill battle in Congress.
“Under the proposal, debt as a percentage of annual gross domestic product would within a few years exceed the level at the end of World War II and climb to 117% of GDP by the end of 2031” The Wall Street Journal reported. “That would be up from about 100% this year.”
Top lawmakers have already sounded the alarm this week about Biden’s proposed $6 trillion in spending with Sen. Tom Cotton (R-AR) saying, “If you think inflation is bad now, wait until Biden spends $6 trillion that we don’t have.”
The increase in personal consumption expenditures “came with a sharp deceleration in personal income, which declined 13.1%. But that actually was less than the 14% estimate,” CNBC reported. “Even with the $3.2 trillion decline in personal income, the savings rate remained elevated at 14.9%. Consumer spending rose 0.5%, in line with estimates. Disposable personal income, after taxes and other withholdings, tumbled 14.6%.”
House Minority Leader Kevin McCarthy warned during an interview on Thursday night that Biden’s massive proposed budget was “too extreme and too expensive.”
“Think about what we’re saying right here — this is what everyone has ever warned us about,” McCarthy said. “That your debt becomes so large, it’s more than a hundred percent of your GDP. There’s no coming back from that. This sounds like Venezuela or Cuba. Even Obama’s economists tell you this is wrong. And when he’s doing it is wrong. He’s doing it with an economy that’s come booming back. So, what’s he doing? Creating inflation. He’s rewarding people not to work.”
“In a short five months, he’s put us in a place we haven’t seen since Jimmy Carter,” he added. “If he simply did nothing, he would make America stronger, but by these actions will put into doubt. Everyone will get their taxes increased. Inflation will come. So whatever money you have will be devalued. This is what happened to Venezuela. And before our very eyes, we cannot allow this to go forward.”
This report has been updated to include additional information.