President Joe Biden on Wednesday said the latest report on inflation in the US shows there is more work to do on lowering consumer prices, which are threatening his domestic agenda and political prospects as he enters his second year in office.
Stubbornly high inflation has proved one of the biggest hurdles for Biden as he works to maintain what is otherwise a robust economic recovery amid a still-raging Covid-19 pandemic. It has stalled legislative work toward his sweeping social and climate spending bill and dragged down his approval ratings as Americans sour on his handling of the economy.
It has also raised questions about Biden and his team’s predictions early last year that inflation would prove only “transitory,” a word many administration officials have come to view with rueful chagrin.
Even as Biden adopts a new, harsher tone against Republicans for blocking voting rights bills and opposing his economic plans, it has become evident that Americans’ frustrations – at the higher prices but also the lingering pandemic – are issues the President and his team will spend the coming months working to allay.
In a statement issued after Wednesday’s report showing consumer prices popping last month, Biden argued progress was being made, even as he acknowledged inflation was causing pain in American households.
The report “demonstrates that we are making progress in slowing the rate of price increases,” Biden said, going on to concede the report “underscores that we still have more work to do, with price increases still too high and squeezing family budgets.”
“Inflation is a global challenge, appearing in virtually every developed nation as it emerges from the pandemic economic slump,” Biden said. “America is fortunate that we have one of the fastest growing economies—thanks in part to the American Rescue Plan—which enables us to address price increases and maintain strong, sustainable economic growth. That is my goal and I am focused on reaching it every day.”
Absent in Biden’s statement was any mention of his Build Back Better plan, the major spending package which in the past he has used as an example of how he is working to lower prices for American families. The nearly $2 trillion bill is currently stalled after Sen. Joe Manchin, the centrist Democrat from West Virginia, said he couldn’t support of package of that size, citing in part his concerns about inflation.
On Wednesday, Manchin said he found the new report – which showed a key measure of inflation climbed to a level not seen since June 1982 – “very, very troubling.” The report found consumer price inflation rose by 6.8% without seasonal adjustments over the 12 months that ended in November, the Bureau of Labor Statistics reported.
Stripping out food and energy, the prices of which tend to be more volatile, inflation rose 4.9% over the same period — the highest level since June 1991.
Looking at November compared to the previous month, prices increased 0.8% on a seasonally adjusted basis, less than the 0.9% increase in October. Without food and energy costs, prices rose 0.5% in November, also a slight decrease from the 0.6% rise in the prior month.
Some of Biden’s advisers sought to downplay the report after its release, pointing to what the administration called a “welcome deceleration” in the rate of inflation.
“It’s really important to get under the hood of these monthly inflation reports,” Biden economic adviser Jared Bernstein told CNN’s Jim Sciutto. “And if you look at the change from November to December inflation is up half a percent. That’s considerably down from October and November, when inflation was up, .8% and .9%, respectively. One reason why inflation came down in December, why the rate of inflation was slower in December, is because energy prices actually fell.”
Bernstein reiterated that the administration is working to do everything it can to “unsnarl supply chains,” including efforts toward easing pressures at ports and in the trucking industry, increasing competition, last year’s strategic petroleum reserve release, and efforts toward congressional passage of a domestic semiconductor production bill. He also renewed calls toward passing Biden’s stalled Build Back Better domestic agenda.
Yet work toward that package is on hold for now as Democrats in Congress advance a pair of voting rights bills, which Biden forcefully advocated for during a speech Tuesday in Atlanta. Voting rights remains a central issue for party activists, and Biden has declared the matter of utmost importance for preserving American democracy.
A path forward on voting rights remains elusive. Despite Biden’s full-throated endorsement of eliminating the legislative filibuster to advance the voting rights bills, two Democrats remain holdouts on changing the rules: Manchin and his fellow centrist, Sen. Kyrsten Sinema of Arizona. Biden planned to speak to Senate Democrats at their weekly lunch on Thursday to make the case for the voting rights bills and the filibuster changes that will be required to pass them.
Still, as Democrats enter a midterm election year with control of both chambers of Congress on the line, it is the economy and inflation that remain on voters’ minds. Polls consistently show the economy is voters’ top priority.
A CNN Poll conducted by SSRS released last month showed three-quarters of Americans say they are worried about the state of the economy in their own community (75%) and 63% say the nation’s economy is in poor shape. Nearly 6 in 10 (57%) say that the economic news they’ve heard lately has been mostly bad, with just 19% saying they are hearing mostly good news about the economy right now.
Asked to rate the severity of seven issues affecting the economy recently, about 8 in 10 say the rising cost of food and other everyday items (80%), the disruption in the nation’s supply chain (79%), and the rising cost of housing (77%) are major problems for the nation’s economy.
Biden and his team have been frustrated that more good news about the economy – including record job gains and growth – isn’t penetrating. And they are highly attuned to sounding tone deaf if they tout soaring stock markets and GDP while Americans are struggling with higher costs.
Recently, Biden has sought to shift some of the blame for higher prices on corporations and Republicans. He has accused gasoline and meat companies of corporate greed and declared Republicans’ claims about his economic agenda “malarkey” at an event last week.
At the same time, his advisers have worked to accentuate falling prices in some areas, attributing the decrease to administration actions.
National Economic Council Chair Brian Deese pointed to reductions in the rate of increase in food costs and gas prices, telling MSNBC that the slower rate of inflation “reflects some progress,” and the Biden administration is “focused on the things that we can do … to sustain a strong economy, a sustainable recovery, while going at prices.”
Ultimately, the policy steps at Biden’s disposal to lower inflation are limited. Some he has already taken, like releasing barrels from the Strategic Petroleum Reserve. Others, like lifting tariffs on Chinese-made goods, could have only limited effect.
The Federal Reserve has traditionally played more of a role in combating inflation, and the White House has made clear Biden views the agency and its decisions as independent. He did nominate Chairman Jerome Powell to a second term last year, signaling his desire to bring continuity to the body.
During his confirmation hearing Tuesday, Powell acknowledged high inflation constituted a “severe threat,” and pledged to raise interest rates if needed.
“If we have to raise interest rates more over time, we will,” Powell said. “We will use our tools to get inflation back.”
This story has been updated with additional reporting.