WASHINGTON, D.C. (WKBN) – While Americans are wringing their hands and wondering how they are going to fill up their tanks or stock their pantries, many are wondering what the Biden Administration is doing to combat the heavy hand of unprecedented inflation.
The Administration says that tackling inflation is its top priority and expects the next round of economic data to show another increase, according to a report by Reuters.
“There is no denying that high prices, particularly around gasoline and food, are a real problem for people,” Biden said earlier commenting on the latest jobs report.
Inflation has been rising at about an 8 percent rate for the year. It’s cooled only slightly from a 40-year high. Newer economic data has also been showing slower growth. Senator Sherrod Brown, D-Ohio, believes there are some good signs, but not enough.
“The public understands that big oil and drug companies and meat packing companies and some of the big international shipping companies have used the pandemic and used the Russia-Ukraine War to raise prices,” Brown said.
According to a briefing from the Biden Administration, a lot has been happening:
- Gas prices: Putting the blame on gasoline price hikes in Putin’s lap, the Biden Administration is releasing one million barrels of oil per day from the Strategic Petroleum Reserve for the next six months and is asking allies to release an additional 60 million barrels. It is also allowing E15 gasoline (which uses homegrown biofuels) to be sold this summer. It is also calling on Congress to make companies pay fees on idled wells and non-producing acres on Federal lands so that companies that continue to sit on excess capacity will have to choose whether to start producing or pay a fee.
- Food costs: Laying the food shortage in Putin’s lap as well, the Biden Administration is looking for ways to boost U.S. farmers’ domestic food production, crack down on illegal price fixing and enforce antitrust laws in the meat and poultry processing sector, create more competition in meat-processing and is providing $1 billion in relief to small businesses and agriculture workers hurt by COVID-19. It is also working with European partners to get more grain unlocked in Ukraine and into the world market to bring down prices.
- Supply Chain: The Bipartisan Infrastructure Law allows goods to move to market more quickly and cheaper, addressing supply chain bottlenecks at ports and tackling unfair practices by global shipping companies
- Housing: President Biden is urging Congress to pass investments in housing production and preservation, financing close to one million affordable homes. The President’s 2023 budget includes investments in housing supply that would lead to the production or rehabilitation of another 500,000 homes
- Jobs: Unemployment is at 3.6 percent. In May, 390,000 new jobs were added, averaging 400,000 jobs per month over the last three months.
No action is a quick fix. Tempering inflation is a job that will take time and will likely get worse before it gets betters, according to many economists. A recession is possible but not inevitable, according to Harvard University economist Jason Furman. With the broadening of inflation to include just about everything, not just gas and food, Furman said heading into a recession will depend on what consumers do. He said that families are dipping into their savings to support spending, but the question is how long will they do that?
“I’m relatively unworried about a recession over the next year because consumer spending has continued to be very strong, and consumers have about $2.3 trillion of excess saving that they accumulated during the pandemic that could still spend out over the next couple of years,” Furman said in an interview with the Harvard Gazette.
According to the Associated Press, average long-term U.S. mortgage rates jumped back up ahead of next week’s Federal Reserve meeting where it’s expected to announce another increase to its main borrowing rate. That has caused many buyers to back away from the housing market, a key factor in the economy.
Right now, inflation is at a 40-year high, and in line with Furman’s thinking, it’s hard to bring it down as long as people keep eagerly spending, according to the Associated Press. Biden needs consumers to pull back just enough so inflation eases, but not so much the economy risks plunging into a recession.
Dave Sess contributed to this report.