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“Inflation soared over the past year at its fastest pace in more than 40 years… The Labor Department said Tuesday that its consumer price index jumped 8.5% in March from 12 months earlier, the sharpest year-over-year increase since 1981.” AP News
“U.S. President Joe Biden unveiled plans on Tuesday to extend the availability of higher biofuel blends of gasoline during the summer to curb soaring fuel costs and to cut reliance on foreign energy sources… The measure will allow Americans to keep buying E15, a gasoline that uses a 15% ethanol blend, from June 1 to Sept. 15.” Reuters
Here’s our coverage of the Federal Reserve’s decision to raise interest rates in March. The Flip Side
The left is cautiously optimistic that inflation will soon start falling and argues that the Biden administration’s policies are not to blame for high inflation.
“Inflation will probably fall significantly over the next few months… Surging gasoline prices accounted for half of March’s price rise, but it now appears that the world oil market overshot in response to Russia’s invasion of Ukraine. A lot of Russian oil is probably still reaching world markets, and President Biden’s million-barrel-a-day release from the Strategic Petroleum Reserve makes up for much of the shortfall…“As of [yesterday], crude oil prices were barely above their pre-Ukraine level, and the wholesale price of gasoline was down about 60 cents a gallon from its peak last month…
“[But] don’t get too excited. The U.S. economy still looks overheated. Rising wages are a good thing, but right now they’re rising at an unsustainable pace. This excess wage growth probably won’t recede until the demand for workers falls back into line with the available supply, which probably — I hate to say this — means that we need to see unemployment tick up at least a bit.”
Paul Krugman, New York Times
“Airlines, with ever more concentrated market power and ever fewer competitive routes, are raising fares—because they can. These are the same airlines that took $50 billion of taxpayer relief early in the pandemic. With post-pandemic travel demand rising, the airlines are not adding flights or seats as fast as demand is increasing. Seat capacity is still around 8 percent below its pre-pandemic peak. Rather, they are flying as full as they can, and jacking up prices…
“United Airlines Chief Commercial Officer Andrew Nocella bragged that United deliberately held back seats for summer travel in anticipation of a rebound so it could charge more for tickets when bookings resumed… [This] has nothing to do with supposedly overheated general demand—and everything to do with pricing power… Raising interest rates or cutting public spending to engineer a recession, à la Larry Summers, would do nothing to restrain this kind of price-gouging.”
Robert Kuttner, American Prospect
“Whereas Summers emphasizes the role that Biden’s American Rescue Plan played in stimulating demand throughout the economy, and the failure of the Fed to react quickly enough to rising prices, [other economists] emphasize pandemic-related factors, particularly the impact of the coronavirus on global supply chains and the American labor market…
“Prices are also rising rapidly in other advanced countries, which responded to the pandemic with very different macroeconomic policies. Last month, the official estimated inflation rate for the euro zone hit 7.5 per cent, which isn’t far below the U.S. rate…
“Some of Summers’s critics also accuse him of downplaying very tangible benefits that the American Rescue Plan delivered to many ordinary Americans whose livelihoods were stricken by the pandemic. ‘It was about providing families with economic relief to get them to the other side,’ [director of macroeconomic research at the Jain Family Institute] Claudia Sahm said.”
John Cassidy, New Yorker
The right criticizes the Biden administration for exacerbating inflation and criticizes the ethanol waiver.
The right criticizes the Biden administration for exacerbating inflation and criticizes the ethanol waiver.
“In February 2021, the month after Biden took office, the inflation rate was just 1.7%. In April 2021 it spiked to 4.2%. By May 2021, the inflation rate was 5%; it remained in that range until October 2021, when it spiked to 6.2%; it then spiked again to 6.8% in November 2021 and 7.5% in January 2022. In other words, the problem ain't Putin…
“It also isn't supply chain issues alone. The core inflation rate in Europe has remained well below that of the United States; the harmonized index of consumer prices (HICP) was 5.9% in February 2022 in the Europe area, compared with 7.9% in the United States… The problem lies in loose monetary policy from the Federal Reserve for years on end, combined with wildly irresponsible economic policy from the Biden administration…
“The Trump administration, along with a bipartisan contingent in Congress, spent nearly endless amounts of money as the American economy was subjected to an artificial coma. But the Biden administration entered office with a working vaccine and COVID-19 on the wane — and then proceeded to inject trillions more in spending into the economy. In 2020, the government spent approximately $6.6 trillion in federal outlays; in 2021, the year of recovery, the government spent $7.2 trillion.”
Ben Shapiro, Creators
“Compared to a year ago, you’re paying 48 percent more today for gasoline; 35.3 percent more for a used car; 21.6 percent more for your natural-gas bill; 13.7 percent more for meat, fish, and eggs; 12.5 percent more for a new car; 11.1 percent more for electricity; 10 percent more for food at home; 7.7 percent more for transportation; 6.9 percent more for food away from home; 6.8 percent more for apparel; and 5 percent more for shelter…
“Americans aren’t in a bad mood just because gas is much more expensive. They’re in a bad mood because just about everything is more expensive. Never mind taking steps to alter federal policy to fight inflation; President Biden has extraordinary difficulty talking about inflation. He infamously pledged last July that, ‘There’s nobody suggesting there’s unchecked inflation on the way — no serious economist.’”
Jim Geraghty, National Review
Regarding ethanol, “Ukraine and Russia grow a significant amount of the world’s grain, mainly wheat, and the impact of the war will likely lead to shortages in Europe and around the world. The US produces enough wheat for self-sufficiency, but the prices are commoditized globally, so we can expect higher prices too…
“Plus we will have lots of pressure to fill the gap left over by Russia’s war, which means that we will have enough but not exactly plenty. And so Biden’s plan on inflation and high gas prices is to literally stick more of our food into gas tanks rather than on dinner plates…
“Biden and his team have no solutions, but only a series of gimmicks that fail right out of the chute. Why not just drill for more oil and expand our refining capabilities to actually solve the supply issues for gasoline and lower prices organically? This White House is willing to try anything except what actually works when it comes to any crisis.”
Ed Morrissey, Hot Air
