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The Federal Reserve is looking to slow soaring inflation and is noting the possibility of the U.S. suffering from a higher unemployment rate, a decline in economic growth and a recession, potentially creating more problems for the Biden administration.
Republicans have already placed the blame on the administration and on Democratic lawmakers for inflation levels not seen in 40 years, citing last year’s COVID-19 stimulus, just as the nation prepares for November’s midterm elections.
BEN BERNANKE ASSESSES THE FED, POWELL AND INFLATION
President Joe Biden and the White House COVID-19 Response Team participate in a virtual call with the National Governors Association from the South Court Auditorium of the Eisenhower Executive Office Building of the White House Complex on Monday, Dec (Kent Nishimura / Los Angeles Times via Getty Images / Getty Images)
“It is this president and his all-Democratic government who have drained American families’ pocketbooks, and every poll shows our citizens understand that sad reality all too well,” Senate Minority Leader Mitch McConnell, R-Ky., said in recent remarks on the Senate floor.
President Biden has been faced with high inflation since last year and Russia’s war in Ukraine, launched in late February, has caused further economic complications.
In April, consumer prices rose 8.3% from a year before, forcing Americans to have to pay more for gasoline, groceries and other expenses.
Even worse, concerns of a recession, which would likely come in 2023 according to some estimates, paint a new grim outlook for the U.S. economy.
The president and his economic team have insisted that the economy is in a good place to withstand setbacks, highlighting factors like a strong labor market and low unemployment rates.
“Our economy is in a transition from what has been the strongest recovery in modern American history to what can be a period of more stable and resilient growth that works better for families,” National Economic Council Director Brian Deese said Sunday on CNN’s “State of the Union.”
INFLATION SOARS 8.3% IN APRIL, HOVERING NEAR 40-YEAR HIGH
Director of the National Economic Council Brian Deese speaks on rising food prices at a press briefing at the White House on September 08, 2021, in Washington, D.C. (Photo by Kevin Dietsch/Getty Images / Getty Images)
As part of an effort to improve Americans’ view of the economy, Biden will travel around the country to push his claims of a recovery. He is also attempting to persuade voters that his administration offers better economic policies than Republicans do. The administration has claimed that the GOP would fail to do enough to curb inflation and that it would look to increase taxes for American families.
Recent polling shows that the economy ranks high on voters’ list of priorities and Republicans are pointing to the current state of the economy in an attempt to bolster their chances at taking control of Congress.
Federal Reserve Chairman Jerome Powell told The Wall Street Journal last week that “there could be some pain involved” regarding efforts to bring down inflation and that the U.S. might see small jumps in unemployment.
Deese said Sunday that the White House supports the Fed’s response.
“We need to give the Fed the space and the independence to do its job, which is to get inflation under control,” he said.
IS A RECESSION COMING? WALL ST. WEIGHS IN
A man shops at a Safeway grocery store in Annapolis, Maryland, on May 16, 2022, as Americans brace for summer sticker shock as inflation continues to grow. ((Photo by JIM WATSON/AFP via Getty Images) / Getty Images)
Larry Summers, Treasury secretary under former President Bill Clinton, told the WSJ earlier this month that he believes it is more likely than not that a recession occurs in the next two years.
“I think the risks are just quite substantial,” he said.
Biden has continued his push for imposing higher taxes on the wealthy and on large corporations to fund investments in social programs.
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The administration has argued that these social programs would lower costs for everyday Americans, but the president’s Build Back Better proposal that included those initiatives failed to make it through the Senate after Democratic West Virginia Sen. Joe Manchin and Republicans opposed the measure, warning that increased spending will exacerbate the inflation problem.
The Wall Street Journal contributed to this report.
