This week’s economic news was not good for the White House. On April 25, the Bureau of Economic Analysis reported the first quarter GDP increased only 1.6% according to their advance estimate. This was below the 2.4% expected estimate by economists surveyed by the WSJ. Additionally, the year over year Personal Consumption Expenditures index rose from 2.5% in February to 2.7% in March, mirroring the increase seen in the CPI as it went from 3.2% in February to 3.5% in March. Now there are concerns that inflation may be rebounding. This scenario means the Federal Reserve is likely to keep rates higher for longer, dashing hopes for rate cuts that Wall Street desperately wants.
As we’ve been writing about for some time, our inflation tracking has clearly shown that this problem has not gone away. The latest report for March (3.5% year over year CPI) now makes ten months in a row that inflation has stayed at or above 3%. Our Presidential Inflation Rate tracking the cumulative rate of price increases since President Biden has
been in office has gone over the 19% mark for the first time (19.4%).
The economic narrative that the Biden campaign has been counting on has experienced a setback in the last couple of months. The tense situation in the Middle East is showing no signs of cooling off, posing other potential challenges on the horizon with gas prices and supply chains. From our tracking of Presidential Inflation Rates at the same point in administrations, gas prices have been a problem for the Biden team even before the October 7 attacks in Israel. The most recent inflation report shows an almost 50% (47.8%) increase in gas prices since the beginning of the Biden presidency.
This week’s news and the ongoing Middle East tension mean more tumultuous times may be ahead for the Biden team and that they may have to readjust their strategy on the issue of the economy.