President Biden: Every other aspect of the economy is racing ahead. It’s doing incredibly well. We’ve never had this kind of growth in 60 years. But inflation is affecting people’s lives. It’s a real bump in the road. It does affect families. When you walk in the grocery store and you’re paying more for whatever you’re purchasing, it matters. It matters to people when you’re paying more for gas, although in some states we’ve got the price down below $3 a gallon. But the point is, it’s not gone down quickly enough. But I think it will.
NY TIMES
by Jim Tankersley
Dec. 10, 2021
WASHINGTON — President Biden and his top aides are struggling to bridge the gap between the economy they want to celebrate and the one that has left many Americans anxious and frustrated, as a record-setting recovery collides with prolonged inflation and an ongoing pandemic that has left consumers deeply pessimistic.
The challenge begins with a disbelief of sorts among Mr. Biden’s economic advisers. They insist the job market, with a 4.2 percent unemployment rate, has never been better, delivering wage gains for lower-paid workers that Mr. Biden believes will help lift more people into the middle class. They say those benefits will endure for years, even once inflation, which last -month accelerated at its fastest pace in 40 years, cools down.
The struggle is also entwined with Mr. Biden’s fight against Covid. Administration officials say that the anxiety voters are expressing to pollsters is less about the economy and the president’s handling of it and more an expression of pent-up frustration with a pandemic that has persisted for nearly two years.
White House officials say they have no plans to shift Mr. Biden’s messaging on economic issues, even as poll after poll shows his approval ratings in decline and voter worry over inflation swamping all other views of the economy. Their strategy remains focused on stressing the administration’s work to spread vaccinations and end the pandemic without further lockdowns, cheering the nation’s progress in economic growth and promising that Mr. Biden’s policies will bring down prices for oil, food and consumer goods.
“Every economic indicator shows an economy that is growing, that is stronger, that is creating jobs, that is putting more money in people’s pockets, and that is in part a result of President Biden’s economic agenda,” Kate Bedingfield, the White House communications director, said in an interview. “I think what you hear from the president is that he understands that when people experience a higher price at the grocery store or at the gas pump that has an impact on their budget, and so he’s doing everything in his power to bring those prices down.”
Still, there is an economic and political chasm on inflation between the administration and American voters. Recent polls by Monmouth University, CNBC and even the liberal Navigator research group show rising anxiety over the issue and warning signs for the Democrats who control Congress ahead of the midterm elections. Consumer confidence surveys show price increases are denting Americans’ optimism for the economy in the year ahead. The University of Michigan’s survey of consumers shows Americans have lower expectations for the growth of their incomes, adjusted for inflation, over the next year than they have since the waning years of the Obama administration.
Administration officials have consistently underestimated the size and persistence of price increases throughout this year, declaring at regular intervals that they would abate as various pandemic-related challenges worked their way through the global economy. On Friday, after the Labor Department reported that prices rose at their fastest annual rate since 1982, Mr. Biden issued a statement saying the data did not reflect more recent trends, which he said showed prices moving down for cars and gasoline, among others
Mr. Biden described rising prices, including gas prices, as a “bump in the road.” He said passing his social spending package will relieve pressure on American families. Mr. Biden’s team is undeterred. They see the economy showing signs of what liberal economists have long said is the recipe for delivering the full gains of economic growth to low-paid and middle-class workers, even after factoring in rising prices.
The ingredients include a tight labor market, where job openings far outnumber job seekers and employers are forced to raise wages for workers in retail stores and restaurants. And they include robust government aid programs over the last two years that have helped American workers build up savings, pay down debt and avoid the threat of eviction or foreclosure.
Officials point to estimates by Arindrajit Dube, an economist at the University of Massachusetts at Amherst, that find the lowest-paid 70 percent of American workers have seen wage increases over the last two years even after accounting for inflation. They say the raises and pandemic aid programs, including direct checks to low- and middle-income households and an expanded tax credit for parents that has been delivered in monthly payments, have given typical households an inflation-adjusted increase in how much money they have to spend.
Administration aides read those statistics, and some survey data like Americans’ belief that jobs are plentiful, as evidence that people are happier with their economic situations than would be expected from reading and watching what they call unbalanced coverage of the economy in the news media.
“I have never seen a stronger labor market than the one we’re seeing today,” Jared Bernstein, a member of Mr. Biden’s Council of Economic Advisers, said in an interview. “It is accomplishing something that is at the absolute core of Biden-nomics, which is providing bargaining clout to middle- and low-wage workers at a level that we haven’t seen in decades.”
But other measures suggest workers are correctly perceiving a slowdown or reversal in their real wage gains. An analysis by Jason Furman of Harvard University, a former top economist for President Barack Obama, shows most workers have seen slowing inflation-adjusted wage gains — or even wage declines — that have worsened as price increases heated up this year. Friday’s Consumer Price Index underscored the point, showing surging prices for rent, cars, gasoline and household staples like cereal and eggs.
What to Know About Inflation in the U.S.
Why Washington Is Worried: Policymakers are starting to acknowledge that price increases have been proving more persistent than expected.
Who’s to Blame for Rising Prices?: Here are the most obvious candidates — and where the evidence looks strongest.
What the Experts Say: Most agree the spike in prices is linked to the economic recovery. When it will fade, and by how much, are less clear.
The Psychology of Inflation: Americans are flush with cash and jobs, but they also think the economy is awful.