Consumer prices surged again last month — they’re now up 8.3% over last year. But what do you expect? President Joe Biden and Congress have done zilch to stem the tide and instead have kept fueling it.
That’s left the job to the Federal Reserve, which will now have to risk a painful “hard landing” recession to rein in runaway inflation.
Last month Biden boasted that the economy had “0% inflation” in July, though prices were up 8.5% over a year earlier, near the worst in 40 years. He and his supporters tried to pretend the crisis was over, or at least easing.
Yet figures Tuesday from the Bureau of Labor Statistics show they’re actually still rising and up more than economists expected, despite falling gasoline costs — themselves the result of Americans driving less thanks to (you guessed it) . . . higher gas prices.
Food prices rose 11.4% in the last year; electric bills surged 15.8%; piped gas, 33%. A new car will run you 10.1% more, on average. And on and on — with no end in sight.
So much for Biden’s Inflation Reduction Act, which does nothing to curb inflation but instead spends money on green-agenda subsidies, a surefire way to keep inflation raging. The law also slaps Americans with billions in new taxes, which will only discourage investment and make a hard-landing recession even harder-landing.
Throw in a tight labor market and the Federal Reserve is going to have a near-impossible time trying to curb price hikes via steep interest-rate upticks without also tanking the economy. It’s expected to boost rates by a larger-than-normal .75 percentage points next week, though some think even a full-point raise is possible.
Economists are rightly grim: Deutsche Bank warns that the economic “pessimists” will prevail in dismissing a “soft landing,” with the full impact of interest hikes felt only next year.
“Stubborn inflation pressures are likely to force the Fed to turn up the heat on its tightening campaign, which puts the broader economy at further risk of a material downturn/recession,” echoes Jason Pride at private-wealth manager Glenmede. Fitch predicts “below-trend GDP growth in 2022, given weak incoming data and the hawkish Fed interest-rate stance, with a recession likely in 2023.”
Markets plummeted Tuesday, with the Dow dropping nearly 1,300 points, the worst day since June 2020.
Yet Team Biden keeps claiming Americans are enjoying the best economy ever. Heck, the White House literally held a party to celebrate on Tuesday. If this bunch offers you Kool-Aid, don’t drink it.