President Joe Biden wants to assure you, the person living in America, that his administration is taking the looing inflation threat seriously. In a speech, he said: “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 as needed.”
Biden also spoke in the same speech about how he’s working closely with Federal Reserve Chairman Jerome Powell to monitor inflation in the economy. He’s trying to present the idea that he’s in charge and being vigilant. And that might work — if he didn’t immediately turn around and tout the massive spending plan he and congressional Democrats are trying to pass.
First up is an infrastructure spending plan, estimated to cost roughly $1.2 trillion. The details are still getting hammered out and debated in the House and Senate. On the flip side, Democrats are trying to shove through a “human infrastructure” spending bonanza of liberal wishlist items estimated at $3.5 trillion.
Altogether, Democrats are proposing an estimated $4.7 trillion in new spending, assuming we don’t hit any cost overruns. It is, in (large) sum, a massive influx of spending fuel, getting poured directly onto an economy running hot from the pandemic re-opening.
Inflation isn’t a far-off distant threat; it’s here right now. We are actively living in an inflationary moment. We’re not discussing whether or not inflation occurs; we’re debating how long we can live with it.
People are experiencing a rapid increase in all categories. A recent Wall Street Journal report said “companies are charging more for products from metal fasteners to Oreo cookies, helping fuel inflation like the U.S. hasn’t seen in more than a decade.”
Any category you can imagine is experiencing some inflationary price pressure. It’s inescapable.
Some of this is getting blunted by an increase in wages that some workers are experiencing. But those increased wages are immediately getting gobbled up by the inflation tax that’s there to bring American workers back to where they were before the pandemic.
In their report on June, the U.S. Bureau of Labor Statistics (BLS) said inflation increased 5.4% over this point last year, and that “was the largest 12-month increase since a 5.4-percent increase for the period ending August 2008.” The prices for cars are literally off the charts: “The index for used cars and trucks increased 45.2 percent, the largest 12-month change ever reported for that index.”
Biden and his administration are saying these are “transitory” price increases. We don’t have to expect prices and demand to continue increasing, they claim.
Perhaps so, but that’s ignoring the trillions in new spending the Biden administration wants to pour on the situation, which can drive demand further up, providing more pressure on prices across the nation.
In short, Biden wants to push the demand curve higher and give inflation even more fuel. Before factoring this spending in, businesses were already doubtful about the word “transitory.” In an interview with the Wall Street Journal, Julien Mininberg of Helen of Troy, Ltd., which makes things like Pert shampoo and OXO products, said, “I don’t think anyone knows what the word transitory is really going to turn out to mean.”
He’s not alone. In an Axios survey, JPMorgan Chase CEO Jamie Dimon said, “The inflation could be worse than people think… I think it’ll be a little bit worse than what the Fed thinks. I don’t think it’s only temporary.” Other executives and business leaders voiced similar concerns.
Axios wrapped their reporting up with a warning: “While it’s possible executives could be exaggerating risks affecting their business, they should still be taken seriously. During the previous earnings season, execs were unusually vocal about inflation at that time too. And their alarms showed up in the inflation reports that followed.”
And here we are, with the inflation that the business community foresaw and that the Biden administration continues to ignore. The people dealing with inflation day-in and day-out aren’t seeing transitory impacts on their bottom lines. And neither are consumers.
It’s possible inflation is transitory and we experience a shift in pricing pressures. Donald Trump was president of the United States, and we’re living through the tail-end of a once-in-a-century global pandemic. Anything is possible.
But it’s also possible, and indeed likely, that pouring nearly $5 trillion in new spending on an economy running hot will encourage more price increases and more inflation, and make the American people poorer in the process.
Handwaving that fact away isn’t taking the inflation threat seriously, as Biden likes to claim. It’s taking the issue unseriously. It shows blindness; it’s wanting Democratic spending wishlist items more than protecting Americans from high inflation.
Biden can’t claim he wasn’t warned. Analysts from the right and left have warned him. Economists from the Obama administration have warned him. His position suggests the only thing he’s taking seriously is spending more, not getting a handle on inflation.