Biden Faces Unprecedented Challenge as Inflation Continues to Bane the Economy

President Joe Biden is confronting a self-inflicted crisis in the US economy, as inflation woes erode his approval ratings and put Democrats at a disadvantage in the November congressional elections. The President has shifted his focus on the Federal Reserve to tackle inflation, but its belated intervention may come too late to ease the pain of soaring food prices and record gasoline bills. Every American feels the pinch of inflation, regardless of income level, as the cost of everyday life increases without respite.

Key Takeaways:

• Inflation has reached a 40-year high, with prices rising 8.6% over the past 12 months, and Biden's administration has been criticized for underestimating the crisis.
• The administration's credibility is at stake, as its failure to predict the inflation surge and inability to quickly address it raises questions about its understanding of the economy.
• The Federal Reserve is expected to raise interest rates by three-quarters of a percentage point on Wednesday, a move that may force the economy into a recession to combat inflation.
• Biden's approval ratings have slumped, with his tanking numbers leading to comparisons with Jimmy Carter's presidency, which was also marred by an inflation crisis.
• Economics experts are warning that the current economic environment is particularly challenging, with oil price shocks and supply chain delays exacerbating the crisis.
• The Biden administration's policies, including the American Rescue Plan and the bipartisan infrastructure law, are under scrutiny, with some arguing that they may have contributed to the inflation surge.
• Former Treasury Secretary Larry Summers warned of the risks of inflation and recession, and his current outlook does not offer much comfort to the White House.

Statistics:

• Consumer confidence has slumped to a record low since the University of Michigan started collecting such data in 1952.
• The stock market has tumbled into a bear market, erasing the gains made since Biden took office.
• Gasoline prices have averaged above $5 a gallon, while inflation has risen 8.6% over the past 12 months.
• The Federal Reserve is expected to raise interest rates by three-quarters of a percentage point on Wednesday.

Sources:

• CNN, "Inflation: A pernicious crisis afflicting every American", June 15, 2022
• CNN, "Biden faces unprecedented challenge as inflation continues to erode economy", June 22, 2022
• Biden: CNN, "State of the Union with Jake Tapper", June 18, 2022
• Summers: CNN, "State of the Union with Jake Tapper", June 19, 2022
• Summers: "An Economy's Anatomy: The Post-COVID 19 Era", Harvard University Press, 2022
• Biden: "Speech to Labor Unions in Philadelphia", June 21, 2022