Flashback: Biden Says Long-Term Inflation 'Highly Unlikely' - Because Wall Street Said So
When President Joe Biden talks about “temporary” inflation, how long does “temporary” mean? Asking for America.
In October, inflation hit a high not seen in three decades, according to The Wall Street Journal. Prices year-over-year increased by 6.2 percent, the biggest jump since 1990. The core price index, meanwhile — which takes unpredictable food and energy prices out of the equation — sat at 4.6 percent, the highest since 1991.
When Biden took office in January, inflation was at 1.4 percent. By April, it had soared to 4.2 percent. It was at 5 percent in May and has stayed above that number ever since.
And yet, Biden has been dismissive of the idea that there would be any kind of long-term inflation problem — because Wall Street said so.
On July 19, for instance, the president said, “We also know that as our economy has come roaring back, we’ve seen some price increases.
“Some folks have raised worries that this could be a sign of persistent inflation — but that’s not our view,” he continued. “Our experts believe and the data shows that most of the price increases we’ve seen were expected and expected to be temporary.”
On July 21, he also said “the vast majority of the experts — including Wall Street — are suggesting that it’s highly unlikely that it’s going to be long-term inflation, that it’s going to get out of hand.”
Yes, no long-term inflation problem because Wall Street said so. And it’s not just the president who comes across as a man who’s never read or watched the movie adaptation of “The Big Short,” Michael Lewis’ postmortem of the 2008 economic crisis and Cassandra-esque warning about why trusting Wall Street may not be the wisest move there is.
Take Jared Bernstein, a member of the president’s Council of Economic Advisers.
“From the start, we were clear that inflation would firm as the rescue plan got shots in arms and checks in pockets,” Bernstein said in June, according to Politico.
“The reason these price pressures are upon us is getting lost: There’s an extremely robust recovery afoot, with strong job creation and wage gains for workers who finally have some bargaining clout.”
By most metrics, however, wage increases haven’t been able to keep up with inflation, according to a Friday CNBC report. Not only that, as the financial network noted in September, many analysts were concerned about how rising wages and the labor shortage were inducing inflation numbers to rise. It seems that if you pay people more money for the same work, that doesn’t necessarily mean they’re going to be any better off — particularly if that causes costs to rise.
Don’t tell that to Joe Biden, though. Remember this creepy clip from the summer?
WATCH: President Biden addresses talk of labor shortages amid ease in Covid-19 restrictions.
“Pay them more. This is an employees’ bargaining chip now.” pic.twitter.com/XlBE0KHK2I
— MSNBC (@MSNBC) June 24, 2021
So, how’s that working out now?
It’s worth noting that with this round of inflation numbers, Joe Biden is paying attention. Kind of.
“Inflation hurts Americans pocketbooks, and reversing this trend is a top priority for me,” Biden said in a statement on Wednesday. “The largest share of the increase in prices in this report is due to rising energy costs — and in the few days since the data for this report were collected, the price of natural gas has fallen.”
“Other price increases reflect the ongoing struggle to restore smooth operations in the economy in the restart: I am traveling to Baltimore today to highlight how my Infrastructure Bill will bring down these costs, reduce these bottlenecks and make goods more available and less costly. And I want to reemphasize my commitment to the independence of the Federal Reserve to monitor inflation and take steps necessary to combat it.”
That first part isn’t just grammatically incorrect. The core price index still takes energy out of the equation — and it’s higher than it’s been in 30 years. The second part is disingenuous: Biden’s infrastructure bill won’t help bring down supply chain-induced inflation any time in the near future, to the extent trillions more in government spending will quell inflation at all.
But don’t just ask me. Ask Wall Street, as Joe Biden was so willing to do back in the summer. According to The Hill, Diane Swonk, chief economist at Grant Thornton, said in a Wednesday analysis that we’re just getting started.
“The costs for low-wage households to cover their commuting costs, grocery bills and rents are eating into the jump they have seen in wages,” Swonk wrote. “The public is angry.”
“Inflation is sizzling and will likely get hotter before it cools.”
Perhaps she’s right. Perhaps she’s not. Whatever the case, however, our inflationary issues don’t feel like they fit under any reasonable definition of “temporary” any more.
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