Inflation rose in the latest data from the US government’s Bureau of Labor Statistics (BLS), released on March 12. That’s not a huge increase, but enough to keep the erosion of the dollar’s value in the headlines and fuel Americans’ dissatisfaction with the economy. , and will be greeted as very bad news by the White House. The president and his allies work hard to claim credit for what they tout as a thriving economy, but all they have done is link the Biden brand to rising prices and a general disgust with the president’s management.
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Prices rising, once again
“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4% in February on a seasonally adjusted basis, after rising 0.3% in January,” according to the BLS. “Over the past 12 months, the general item index increased 3.2% before seasonally adjusted.”
It’s a great improvement over the 9.1% inflation reached in 2022. But it’s still a reminder to the public that the money in their wallets is buying less with each passing day. It is also an open-handed slap — albeit with some consumer resentment — to spendthrift politicians who have long mimicked concern about inflation while openly pursuing policies that pushed prices higher.
“For years, left-wing economic thinkers have pushed for more government spending and urged the Federal Reserve to be less paranoid about inflation, with the goal of getting unemployment as low as possible,” he wrote last month Victoria Guide for Politic.
President Joe Biden and company have eagerly embraced the idea, pushing not for billions, but for trillion of dollars in spending, deficits and debt on the theory that Americans would like results.
But “Americans don’t seem very enthusiastic,” Guida added. “Because they really hate inflation.”
Inflation causes pain
People don’t like inflation because it’s deadly to budgeting, saving and financial planning. Inflation creates a race between wages and prices, making it difficult to know whether income will cover the same groceries, rent and other costs it did in the past.
“Real average hourly wages for all employees fell 0.4% from January to February,” the BLS announced the same day it released the CPI data. That said, according to the same press release, there has been “a 1.1% increase in real average weekly earnings” over the past year. But not all measures indicate wage maintenance.
“Inflation-adjusted wages have shrunk 3.7% since the end of 2020,” Stephen Miran of the Manhattan Institute commented in November, based on the Employment Cost Index, a different BLS measure that shows that wages still struggle to keep pace with the declining value of wages. the dollar. “Worse, falling real wages have erased all the gains made in the late 2010s.”
In any case, suffice it to say that inflation makes life unpredictable and causes pain.
In the latest monthly survey of Financial Times and the University of Michigan’s Ross School of Business, inflation ranked as the top economic issue on people’s minds as they determined their vote for president, chosen by 67% of respondents. Nearly two-thirds of respondents said they were “cutting nonessential spending, such as vacations, dining out, or entertainment” in response to rising prices; half will “reduce spending on food and daily necessities.”
It’s no surprise that people are unhappy with politicians who make them pay for inflation. In that survey, 45% said President Biden’s economic policies hurt the economy (31% said they helped) and 59% disapproved of his handling of economic issues (36% approved) . Americans agree with the White House that the president’s so-called “Bidenomics” has had an impact, but they don’t like the results. Many economists agree, especially when it comes to inflation.
Government irresponsibility towards money causes inflation
“Inflation comes when aggregate demand exceeds aggregate supply,” economist John Cochrane of the Hoover Institution and the Cato Institute wrote for the International Monetary Fund this month. “The source of the demand isn’t hard to find: In response to the upheavals of the pandemic, the U.S. government has sent about $5 trillion in checks to people and businesses, of which $3 trillion has just been printed, with no repayment plans Other countries have adopted similar measures: fiscal expansions and a proportional increase in inflation.”
True, the spending frenzy began when Donald Trump was president, but Biden has embraced the idea as his own. Now, the White House boasts of vast “generational investments” that “reverse decades of disinvestment in public assets,” but there is a direct connection between a wave of government debt and spending and the erosion of the value of people’s money.
“The mantras of the 2010s – ‘secular stagnation’, ‘modern monetary theory’, ‘stimulus’ – which preached that prosperity was necessary only for the government to borrow or print a huge amount of money and distribute it, are in dustbin. You asked for it. We tried it. We got inflation, not boom,” adds Cochrane.
This leaves the Biden administration with the consequences of touted “Bidenomics” spending like an albatross around its neck. There is no escape from the policies that politicians have deliberately and publicly embraced when the public turns against them.
“There’s a good deal of fear and introspection among the architects of these efforts that people aren’t necessarily buying what we’re selling,” said one prominent progressive Politic‘s Guide.
Get ready for more of the same
Unfortunately for anyone who fears that irresponsible government largesse will lead to ever-increasing economic chaos, the Biden administration appears determined to double down on high spending and massive borrowing in its future economic policies.
“For fiscal year 2025, which begins October 1 of this year, Biden is calling on Congress to spend $7.3 trillion while the federal government will only collect $5.5 trillion in taxes,” ReasonEric Boehm reported this week. “This will require borrowing $1.8 trillion to make ends meet. Over the 10-year span covered by the president’s budget plan, federal revenues would exceed $70 trillion, but Biden proposes spending $86.6 trillion dollars.”
With floods of government money tied to the erosion of purchasing power, it is interesting – for a certain value of the word – to contemplate what BLS press releases on prices and wages might look like in the years to come. And to anticipate the suffering resulting from reduced budgets.