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“Inflation in the United States accelerated in September… Overall prices rose 8.2% in September compared with a year earlier… Consumer prices, excluding volatile food and energy costs, jumped 6.6% in September from a year ago — the fastest such pace in four decades.” AP News
The right blames the Biden administration for the high level of inflation.
“Despite warnings from leading economists from the Clinton and Obama administrations, Mr. Biden from the start of his presidency insisted on enacting massive spending increases based on his false claim that the U.S. economy was in a shambles and in need of emergency federal intervention. It was never true. In the first quarter of 2021 when he took office, the U.S. economy was humming along at a robust 6.3% annual growth rate…
“The Biden fairy tale of a struggling economy was used to sell his program of juicing demand with heavy spending. Meanwhile his regulatory activism discouraged supply, especially in energy. The result: too many dollars chasing too few goods…
“Of course Mr. Biden could not have done all his damage if the Federal Reserve was not also blundering—continuing its money-creation binge long after the rebound from lockdowns had begun. But at least the Fed is trying to learn from its mistakes and is now withdrawing stimulus. Mr. Biden shows no signs of contrition or understanding.”
James Freeman, Wall Street Journal
“Biden put a happy face on the news, claiming in a statement that ‘today’s report shows some progress in the fight against higher prices.’ You can’t drive your car on ‘some progress’ and, judging by the spike in Treasury yields on Thursday, the bond market didn’t agree with him. Mr. Biden also said the cost of living has been a longstanding problem. But consumer prices never rose by more than 3% a year in the decade before he became President. Wages after inflation have now fallen more since he took office—4.3%—than they did during the financial crisis of the late 2000s…
“The President could help mitigate the economic pain with regulatory and fiscal policies that boost supply. But he’s doing the opposite, signing a corporate tax increase and imposing new regulatory burdens on business that create uncertainty and will discourage hiring. A case in point is this week’s rewrite of the independent contractor rule. He could also help bring down energy prices by encouraging more U.S. oil and gas production. Instead he’s seeking to ease sanctions on Iran and Venezuela and begging OPEC to pump more.”
Editorial Board, Wall Street Journal
“Leftists cheered when Congress passed the American Rescue Plan Act, a $1.9 trillion package that professor Larry Summers said was too big and would lead to an inflation spiral. Leftists cheered when Congress passed the $1.2 trillion Infrastructure Investment and Jobs Act. Leftists shouted, ‘Hurrah!’ when Congress passed the Inflation Reduction Act, which does not lower inflation. Now, the Left wants the Federal Reserve to stop raising rates when inflation is still climbing and will probably remain elevated for many months to come…
“If the Federal Reserve were to pause its interest rate hikes, its inflation-fighting credibility would be severely damaged. Inflation expectations, an important component of determining inflation, would increase. Any pause in the inflation fight would inevitably lead to more interest rate hikes. The market hates uncertainty. Market volatility would increase. Uncertainty and volatility would increase the risk of a credit seize-up and a deep recession… Leftists got their cake; now they get their medicine: sharply higher interest rates, because deficit spending does matter.”
James Rogan, Washington Examiner
The left argues that inflation should moderate soon, and urges the Fed not to act too aggressively.
The left argues that inflation should moderate soon, and urges the Fed not to act too aggressively.
“Several factors are pointing to further falls in inflation in the months ahead. As the calendar year comes to an end, some big price increases from late 2021 will drop out of the twelve-month inflation figures. With shipping costs having plummeted recently, the prices of many goods should continue to fall… Despite OPEC’s announcement that it intends to reduce production, crude [oil] isn’t trading much higher than where it was twelve months ago… There are some signs that rents, which have been one of the biggest drivers of inflation in this sector, may finally have peaked…
“It’s hard to know what political impact, if any, this report will have. Conventional wisdom says that stubbornly high inflation should hurt incumbents, but the President’s approval ratings have rebounded in the past three months, and Democrats have moved ahead of Republicans on the generic congressional ballot. Maybe the fall in gas prices since the summer is having an effect. Maybe Biden’s legislative victories, the Supreme Court’s ruling on abortion, Donald Trump’s reemergence, and concerns about Republican extremism are overshadowing economic concerns. Or maybe the polls are missing something. We won’t know until November 8th.”
John Cassidy, New Yorker
“No one expected the Federal Reserve to be able to smother inflation swiftly. But after seven months of rapidly rising interest rates, the central bank has hardly made a dent. Thursday’s look at the September consumer price data shows we’re not much better off now than we were in March, when the Fed began its aggressive monetary tightening… That means consumers are bearing the pain of simultaneously high prices and high borrowing costs. Soon, that pain could be compounded by job losses…
“Ultimately, some say the problem of pandemic-era inflation is just too complex to be fixed with the Fed’s blunt tools. ‘Supply chain bottlenecks, a volatile global energy market, and rampant corporate profiteering can’t be solved by additional rate hikes,’ said Rakeen Mabud, chief economist of the left-leaning Groundwork Collaborative policy group. ‘It’s time for Chair Powell and the Fed to step aside and for Congress to step in.’”
Allison Morrow, CNN
“Conservative economist Greg Mankiw and several others explained that Fed hikes threatened to overdo inflation-fighting. ‘Recessions are painful for a lot of people … you don’t want to cause more [pain] than is necessary,’ Mankiw said. On the left, Columbia’s Adam Tooze explained that the Fed is exporting monetary tightening throughout the world, helping to create a ‘global deflationary cycle.’ And Tooze suggested the heart of the problem with all these tight-money policies: ‘Raising interest rates is not going to bring more gas or microchips to market, but rather the contrary.’…
“When risking a recession that will inevitably affect the most vulnerable people in society, and outright financial crisis if borrowers cannot repay debts, you should at least be reasonably certain that your actions will work… Leading indicators suggest inflation will moderate, perhaps significantly. Hammering through more rate hikes will explicitly immiserate workers, cause unemployment, and potentially trigger global recession. This is the moment where a Federal Reserve chair committed to full employment should face down the inflation hawks.”
David Dayen, American Prospect
