Biden expects US inflation to be ‘temporary’

WASHINGTON: President Joe Biden on Monday sought to tamp down concern about spiraling prices that threaten to put a dent in the US economic recovery, saying the current inflation rise is “temporary.”

While the global supply chain has faced challenges in geting back up to speed, leading to price spikes on many products, “our experts believe, and the data shows, that most of the price increases we’ve seen were expected and are expected to be temporary,” Biden said in a White House speech.

He also said that “no serious economist” is suggesting that unchecked inflation is on the way.

Joe Biden said that his infrastructure and families agenda must be passed to sustain the economic momentum of his first six months in office, aiming to set the tone for a crucial week of congressional negotiations on the two bills.

Senate Majority Leader Chuck Schumer set a Wednesday deadline for a procedural vote to begin debate on the bipartisan infrastructure bill, the details of which are still being worked out as senators wrangle over how to pay for the new spending in the $1 trillion package of highway, water system and other public works projects.

At the same time, Democrats are working out the particulars of a separate bill that would invest $3.5 trillion in social services, education and support for families, that they aim to ultimately pass with solely Democratic support. Democrats hope to show progress on that bill before lawmakers leave Washington for their recess in August.

The legislative wrangling marks a major test of Biden’s ability to deliver on a massive package of economic promises and reforms he made during his campaign. He’s been puting public pressure on lawmakers with a series of speeches highlighting the strengthening economy while emphasizing the need for further investment to continue that growth and to bolster the middle class.

“What the best companies do - and what we as a country should do - is make smart, sustainable investments with appropriate financing,” the president said during remarks at the White House Monday.

Calling his plans a “blue-collar blueprint for building an American economy back,” Biden said: “This is the best strategy to create millions of jobs and lit up middle class families, grow wages and keep prices affordable for the long term.”

The economy has come back to life as more Americans have goten vaccinated and Biden’s $1.9 trillion relief package has coursed through the country. Employers have added an average of nearly 543,000 jobs a month since January, with Federal Reserve officials anticipating overall economic growth of roughly 7% this year that would be the highest since 1984. Yet there is also uncertainty as employers say they’re struggling to find workers at the current pay levels and inflation concerns have yet to fully abate.

Key to Biden’s message is that the growth is occurring as intended and helping the US middle class. Yet much of it is expected to fade as the economy fully heals from the pandemic.

The president is pushing for more than $4 trillion in combined spending with the hopes of prolonging solid economic gains. But his $973 billion infrastructure deal with a group of Senate Republicans lacks a clear plan for how to pay for it, as GOP lawmakers have backed away from tougher enforcement by the IRS. At the same time, his $3.5 trillion package focused on climate, schools and families needs backing from all 50 Senate Democrats to clear a party line vote.

Biden also used his remarks to push back against Republican critics of his plans who argue massive federal investments in the economy will accelerate inflation.

Consumer prices climbed 5.4% for the year that ended in June, the highest annual increase since August 2008. Higher inflation can erode the wages of workers and ultimately hurt economic growth.

Biden said Monday that his proposed investments would help rebuild US supply chains and ease pressures on US production that some economists say have contributed to inflation.

“If we make prudent, multi-year investments in beter roads, bridges, transit systems and high speed internet, a modern resilient electric grid, here’s what will happen: It breaks up the botlenecks in our economy,” he said.

“These steps will enhance our productivity, raising wages without raising prices. That won’t increase inflation, it’ll take the pressure off of inflation,” Biden added.