President Biden dismissed inflation concerns in a speech on Monday.
As The Daily Wire reported last week, the inflation rate has risen to 5.4% in the largest month-over-month increase since 2008. From the beginning of this year, the Department of Labor’s monthly inflation data has routinely outpaced economists’ forecasts.
Americans’ predictions for inflation have also reached record highs. The Survey of Consumer Expectations reveals that median one-year inflation expectations among consumers climbed to 4.8% in June — a 0.8% increase since last month. In January, February, March, April, and May, one-year expectations were 3.0%, 3.1%, 3.2%, 3.4%, and 4.0%, respectively.
President Biden sought to dismiss these concerns in a Monday morning speech.
“Our experts believe and the data shows that most of the price increases we’ve seen were expected and are expected to be temporary,” asserted Biden. “Reality is you can’t flip the global economic light back on and not expect this to happen. As demand returns, there’s going to be global supply chain challenges.”
“That’s a real challenge,” Biden added. “My administration is doing everything we can to address it. But, again, these disruptions are temporary.”
“I want to be clear. My administration understands if we were to experience unchecked inflation over the long-term, that would pose a real challenge to our economy. So, while we’re confident that isn’t what we’re seeing today, we’re going to remain vigilant about any response that is needed.”
As the President mentioned, it is typical for inflation to surge following severe recessions — a reality driven by rebounding demand for goods and services. Nevertheless, a growing number of prominent economists believe that rising inflation is indicative of policymakers’ changing attitudes toward stabilizing price levels.
Last month, executives from Deutsche Bank characterized the global economy as “sitting on a time bomb” due to the Federal Reserve’s dovish disposition toward inflation.
“It is no exaggeration to say that we are departing from neoliberalism and that the days of the new-liberal policies that begun in the Reagan era are clearly fading in the rearview mirror,” wrote economists David Folkerts-Landau, Peter Hooper, and Jim Reid. “The effects of this shift are being compounded by political turmoil in the US and deeply worrying geopolitical risks.”
Likewise, progressive economist Larry Summers — who served as Treasury Secretary under the Clinton administration and Director of the National Economic Council under the Obama administration — suspects that inflation is more than transitory.
“If you looked at how the economy was coming into this year, we had total wages and salaries coming to people that were $20 or $30 billion a month lower because many of them had to be home because of COVID and the economy was slowed,” Summers said in a recent interview with PBS’s Margaret Hoover. “But we put in a stimulus that was putting into the economy more than $200 billion a month. And so when you take a hole and you overfill it, you’re likely to have problems… You’re seeing, it seems to me, some inflationary psychology take hold.”
“And I think we know that inflation’s like a lot of other things, it’s a lot easier to prevent than it is to cure,” he continued. “And I think the credibility of policymakers, including those at the Fed, is much easier to preserve than it is to restore.”
Despite rising inflation, the Federal Reserve has not revealed intentions to taper its $120 billion monthly asset purchases — a policy that drastically increases the supply of the dollar in the interest of stimulating the economy. Meanwhile, following $6 trillion in spending from three federal COVID-19 stimulus bills — two of which were passed under President Trump, and one of which was passed under President Biden — Congressional Democrats are attempting to enact another $3.5 trillion in spending without Republican support.