Continued spending adds to inflation

REHOBOTH BEACH, Del. — While motorcading to his beach house last weekend, President Joe Biden could have looked out the window of his limousine and seen firsthand why he has struggled to contain inflation.

Lining Delaware’s Coastal Highway as it leads into Rehoboth Beach are miles of strip malls, outlet stores, restaurants, hotels and gas stations. The advertised price of gasoline was approaching $5 a gallon. Vacationgoers had packed into the parking lots of pubs and taquerias.

No one is happy that inflation is close to a 40year high, but it will be hard to bring down prices so long as people keep eagerly spending.

Browsing the Polo Ralph Lauren factory store, Nina Cooper was displeased about her rising expenses yet she was still shopping for new outfits. Inflation was not enough to deter the hospital worker, who was grateful that a sevenminute commute spared her some pain at the gas pump.

“Everything is going up — look at these prices,” Copper said. “But you still got to live.”

Biden faces a delicate trade-off as he tries to help his fellow Democrats in the November elections. He needs U.S. consumers to pull back just enough so inflation eases, but not so much that the economy risks plunging into a recession.

The president has flicked at this idea in recent speeches, noting that the pace of hiring has slowed and “we’re beginning a shift to steadygrowth “after a rapid recovery from the coronavirus-induced recession. That recovery that was fueled, in part, by his $1.9 trillion relief package.

Consumers account for most U.S. economic activity, meaning they steer much of what happens with their collective choices. Friday’s report on consumer prices is expected to show that annual inflation slowed ever so slightly to 8.2% in May from 8.3% in April. Economists surveyed by FactSet indicate the decline will largely be driven by expenses other than food and energy, as Russia’s invasion of Ukraine has led to higher prices in those categories worldwide.

Republicans are tapping into the public impatience with inflation remaining persistently high, instead of dropping as promised when the economy reopened after pandemic related closures.

Senate Republican leader Mitch McConnell of Kentucky has attacked higher electricity and gas prices as ultimately the result of an ideological choice by the Biden administration to move away from fossil fuels. The GOP solution is to embrace policies that it believes would increase energy supplies.