Biden aims to do what presidents often can’t: Beat inflation
WASHINGTON — LBJ tried jawboning. Richard Nixon issued a presidential edict. The Ford administration printed buttons exhorting Americans to “Whip Inflation Now.”
Over the years, American presidents have tried, and mostly floundered, in their efforts to quell the economic and political menace of consumer inflation.
Now, President Joe Biden is giving it a shot.
Confronting a spike in gasoline and other consumer prices that’s bedeviling American households, Biden on Tuesday ordered the release of 50 million barrels of oil from the U.S strategic petroleum reserve. The move, done in coordination with several other major nations, is intended to contain energy costs. Oil markets, having anticipated the move, were unimpressed with the details: Oil prices actually rose on the news.
It was just the latest step Biden has taken to show he is doing everything he can to combat inflation as gasoline and food prices, in particular, have imposed a growing burden on American households. On Monday, he announced that he would reappoint Jerome Powell as chair of the Federal Reserve, a move meant in part to reassure financial markets that Washington is serious about containing consumer prices. Last month, he announced a deal to ease supply backlogs at the Port of Los Angeles by extending operations there to 24 hours a day, seven days a week.
Yet none of the president’s actions is considered likely to make a meaningful dent in surging prices anytime soon.
“I don’t think the president has many levers to pull to bring down the rate of inflation any time soon,” said Mark Zandi, chief economist at Moody’s Analytics. “The things he is doing are positive, and there’s no downside to them … but they are on the margins. They’re not going to move the dial very much.”
Inflation is always a tough foe, made even more complicated by the unusual recovery from the pandemic recession, with shortages of supplies and workers and shipping bottlenecks forcing up prices.
The government’s consumer price index skyrocketed 6.2 percent in the 12 months that ended in October — the sharpest such jump since 1990.
Coming after nearly four decades of more or less stable prices, the CPI news represents a “once-in-ageneration uptick in inflation,” said Sarah Binder, a George Washington University political scientist who studies the Fed. “The problem is pretty stark because it’s something that voters notice. It’s hard to escape the impact of a spike in inflation on your daily life, whether it’s buying milk or buying gas.”
The average price of regular gasoline has shot up to $3.40 a gallon from $2.11 a year ago, according to AAA.
Compounding the pain and heightening the pressure on Biden, inflation has been outpacing Americans’ income. Adjusted for price increases, average hourly wages were actually down 1.2% last month compared with a year earlier.
“Inflation is painful, and it’s always political,” said Diane Swonk, chief economist at the accounting and consulting firm Grant Thornton.
It’s partly the consequence of very good news. The world economy — and America’s in particular — rebounded with unexpected speed and strength from last year’s brief but intense recession. It was a result of super-low interest rates, massive government spending and, eventually, the broad rollout of vaccines that allowed more of the economy to reopen.
The swiftness of the rebound caught businesses off-guard. A year and a half ago, they were bracing for the worst — laying off workers, letting shelves and warehouses go bare, reducing investment and factory output.
And energy companies did the same: They cut production of oil and gas as demand for transportation fuels plummeted. Once demand came roaring back, they were unprepared.