BOSTON — President Biden smiled as he spoke to reporters on Tuesday, right after the Bureau of Labor Statistics reported a 7.1% price increase last month compared to 2021. That is the smallest year-over-year jump in months. Major categories such as energy and food prices also saw more modest increases.
“Things are getting better,” the president said. But we wondered: is that really true?
“I would say unreservedly that things get better when you look at how bad things were,” said Art Hogan, head of market strategy for B. Riley Wealth. But he adds: “That’s like saying ‘hey I have a fever of 104 so I need to go to the hospital, but now my fever is 101 so I can just take an Advil and go to bed. better but I still have a fever.”
prof. Jay Zagorsky of the Boston University Questrom School of Business noted that if you think of inflation as a balloon, a 7.1% growth rate doesn’t mean the balloon is deflating: “It means that most prices are actually going up, the bigger Unless your wages have gone up by 7%, you’re actually worse off.”
How about when the president said, “What’s clear is that my economic plan is working”?
Zagorsky: “I’m not 100% sure I’d say it’s the president’s plan, but I’ll say there’s a plan in Washington and it’s having an effect.”
Hogan: “One man in Washington is not going to influence that, except at the edges when they change regulations and maybe tax policies.”
For politicians, optimism can lead to dubious claims. The president was asked, “Can you say when you expect prices to return to normal?”
He replied, “I hope late next year or much closer.”
Our economic experts agree that he probably shouldn’t go there.
“Presidents shouldn’t necessarily try to take credit for when things go well, because then they get blamed when things go badly,” Hogan said. Zagorsky reiterated, “I believe presidents get way too much credit when the economy is good and way too much debt when the economy is bad.”
So if the president can’t have much influence on inflation, who can?
At the moment, the Federal Reserve Board is central. They are trying to manipulate interest rates to cool inflation without sending us into a recession.
Both of our experts agreed that the president’s release of oil from our strategic reserves has contributed to lower gas prices, and curbing prescription drug prices that go into effect next month will help some people cope. But this round of inflation is complex and global, and the truth is that the president’s control over what happens next is limited.