Inflation is high due to COVID, fed policy, supply chain issues. That puts President Biden in a tough spot

Written by Amy Ta, produced by Bennett Purser

Gas prices grow along with inflation, as this sign at a gas station shows in San Diego, California, U.S., November, 9, 2021. Photo by REUTERS/Mike Blake.

Today the U.S. Labor Department said prices in October were 6.2% higher than they were last year, which is the biggest jump in three decades. American families are feeling it, and that’s translating into bad news for incumbent politicians, including President Biden.

U.S. Federal Reserve Chairman Jerome Powell spoke last week about rising inflation on nearly everything we buy: “Inflation is coming higher than expected, and bottlenecks have been more persistent and more prevalent. We see that just like everybody else does, and we see that they're now on track to persist well into next year. That was not expected, not expected by us, not expected by other macro forecasters.”

Supply chains are still broken, says Catherine Rampell, Washington Post opinion columnist writing about politics and economics. “Because of labor shortages and other kinds of problems, it's hard to find the workers to manufacture goods, to transport goods, to put them on the shelf, to get them to consumers, etc.”

Demand is also up and people are buying more than they were pre-pandemic, partly thanks to receiving COVID stimulus checks, she adds. 

“They have a lot in their bank account because of savings. It is relatively risky still to spend money on services … like travel, lodging, going to restaurants. So people … they're flush with cash … they're buying more stuff, whether that's a bicycle, or a car or refrigerator, or what have you. So you have these shortages. And of course, that's driving up prices. So all of those things are contributors, and some of that has to do with government policy.”

Upset about inflation, Americans might take it out on President Biden, who’s in a difficult situation, Rampell says. “If he says, ‘Hey guys, I can't control these things,’ then it sounds like he's being dismissive of the actual pain that many households are facing. But if he pretends that he can do more than he can, then he's setting himself up for failure.”

Republicans are blaming the Democratic agenda for inflation, but Rampell says the biggest factors are the persistence of COVID and Delta variant. 

“Maybe it's [COVID] getting better than it was at least in the United States, but still causing supply chain problems. So Biden has to thread that needle and respond to those Republican attacks. But again, over-promising I think is risky.”

Credits

Guest: