Soaring consumer prices undermine President Biden’s economic approval rate, making inflation an important topic for the White House heading for midterm elections, and the Federal Reserve playing a major role in countering sharp price increases. Nevertheless, the fight against inflation is the focus of the administration’s budget. ..
Mr Biden’s administration emphasized in a budget proposal released Monday that some of the investments it is making or proposing could lower family costs.
Budget documents that refer to the word “cost” 47 times and “inflation” 6 times include funding for port infrastructure development, funding for improving passenger and freight rail systems, and construction of cheap housing stock. And shows the funding to provide funding for rehabilitation. Among other means that may help improve the supply of the economy over time.
The presidential budget is not really a fully enacted policy, but an overview of the administration’s priorities. By repeatedly referencing his family’s cost-cutting plans, Biden reveals that concerns are at the top of his list.
However, there is not much that the White House can do quickly to mitigate the fastest-paced price increases in 40 years. Supply chain modifications can take years to be successful. Meanwhile, the fight against inflation is primarily the Fed’s job.
The central bank raised interest rates for the first time since late 2018 earlier this month, and authorities predict that borrowing costs will continue to rise between this year and next year. Doing so will make large-scale purchases more expensive to cool demand, slow the economy, and curb price increases.
The Federal Reserve’s favorable inflation index is expected to indicate a 6.4% increase in prices over the year to February, based on estimates from Bloomberg’s research released later this week. Central banks are aiming for inflation of 2%, which is more than three times their target. Federal policymakers hope that policy changes, coupled with further supply chain and labor market recovery, will help bring annual inflation back to 4.3% by the end of the year.
Inflation has become a major part of public awareness as inflation has accelerated over the past year. Based on the results of an NBC News poll earlier this month, Mr. Biden’s economic approval rate has plummeted and living expenses are of the highest concern to voters.
Anxiety about high prices is becoming more apparent in everyday life. Cryptocurrency advertising connected by the line “Are you dissatisfied with high inflation?” Hanging at a security checkpoint at Newark Liberty International Airport. Saturday Night Live included a joke about rising fuel costs earlier this month (“Girl, Biden should do something about these gas prices,” Egonovadim said at the start of the skit. Commissioned with Zoe Kravitz).
It creates a challenge for the White House, which can only be faced with higher prices. Russia’s invasion of Ukraine has significantly increased fuel prices. This cannot be countered immediately or completely by either the government or the Fed. Broader, with respect to overall economic pressure, curbing demand is most likely the faster way to slow price increases, but the Fed’s policy changes work by slowing the job market. ..
Much of the world has experienced a surge in inflation following the first pandemic blockade, as factory closures and shifts in purchases to commodities such as sofas and cars have clogged supply chains and created shortages.
“The United States was unaffected by the global inflation that followed the pandemic,” Biden said in a statement at the beginning of the budget document, part of Russia’s invasion of Ukraine, given that the conflict pushed gas up. He blamed the rise in prices. cost.
However, the sharp rise in prices in the United States is particularly noticeable when compared to other companies in the same industry around the world. Many economists attribute, at least in part, to pandemic-responsive state spending. The United States spent a lot of time on packages passed during the Trump administration and on a pandemic that included Mr. Biden and Congressional Democrats passed in early 2021.
The final package came at a time when growth and the labor market were recovering, and some economists warned that it was too big and under-targeted, leading to overheating.