President Biden told Americans exactly one year ago Tuesday that inflation of 5.4% would be “temporary,” and he was right, in the wrong direction.
Consumer prices have kept climbing, to a rate of 9.1% in June.
The rise has been so historic that Mr. Biden and his aides lately have given up trying to predict when inflation will ease, now labeling it as “unacceptably high,” a term nobody disputes.
One Virginia restaurant has even started charging a 3.5% “inflation tax” on its menu to keep up with a wide variety of rising prices.
Now the White House is girding for data later this month that could show the U.S. has fallen into a recession. Having been wrong about inflation coming down, the president and his advisers nevertheless are predicting there won’t be a recession, either.
“Based on consumer spending, based on payroll employment, based on where the unemployment rate is, I think we can confidently say that these numbers that we’re posting are very much inconsistent with a recessionary call, given where we are right now,” White House economic adviser Jared Bernstein said.
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Others think the U.S. is already in recession, and that forecasts colored by partisan goals are dubious.
“For those who told us inflation was ‘transitory,’ their current narrative is the recession will be ‘mild,’” tweeted Thomas Thornton, founder of the market research firm Hedge Fund Telemetry.
Economists at Bank of America, Deutsche Bank and other analysts are forecasting a near-term recession lasting into next year. A recession is defined as two straight quarters of negative growth; the U.S. already experienced negative growth in the first quarter of this year.
With more potential bad economic news looming in the election year, the White House this week took credit for gas prices falling in July and criticized the media for not covering the story robustly.
“President Biden’s top priority is tackling inflation and reducing prices, and his plan is working,” White House Communications Director Kate Bedingfield said in a memo. “The sustained, 34-day decrease in the price of gas is important news for families across the country. Yet the media is doing its own version of rockets and feathers – covering the spike, but not the drop. This is an issue that matters tremendously to American families and coverage should reflect the drop as intensely as it reflected the rise.”
Republicans are calling the White House’s message insulting, after gas prices hit a record average price of more than $5 per gallon last month, which often meant $6 and even $7 in certain metro areas and/or for the premium blends that some cars need.
Republican National Committee Chairwoman Ronna McDaniel accused the president of lying a year ago about the path of inflation.
“Biden lied, Democrats rubber-stamped his failed policies, and now Americans are paying the price,” she said Tuesday. “Biden and Democrats continue to make up excuses while historic inflation and high gas prices wipe out wages. Voters know inflation has not been temporary, but one-party Democrat rule will be.”
Senate Minority Leader Mitch McConnell, Kentucky Republican, said the president’s prediction was “dead wrong.”
“One year later, after nine straight months of inflation over 6%, prices are now rising at their fastest rate in over 40 years,” Mr. McConnell said Tuesday on the Senate floor. “Real hourly wages are declining at breakneck speeds, dropping a full 1% last month alone. The average American worker got a full 1% pay cut just last month alone due to inflation.”
He said in Kentucky, the average household is spending about $600 more per month due to inflation, and food-bank shelves are running low. Mr. McConnell criticized congressional Democrats and the White House for proposing tax increases.
“The answer from Washington Democrats is alarming, but not surprising,” he said. “After spending us into inflation, they now want to tax us into a recession.”
Mr. Bernstein said the president knows there is more work to do. He said Congress could help by approving legislation aimed at reducing the cost of prescription drugs and by spending more than $50 billion to encourage more domestic production of computer chips and other measures.