Category: Economy

This morning’s new inflation numbers confirm the trend we’ve been seeing the past couple of months, that inflation continues to hover well above 3%. Our trending chart shows year-over- year inflation coming in at 3.4% and with the new Presidential Inflation Rate ticking up to 19.9% — almost a 20% cumulative price increase since Biden took office. Today’s report means 11 months in a row of inflation staying at or above 3%. Additionally, it reflects that since December, prices have risen 2.6%. In contrast over the same time period, weekly wages have increased only 1%.

Earlier this week, prior to the new report, Federal Reserve Chairman Jerome Powell indicated he is taking a wait-and-see approach: 

“We did not expect this to be a smooth road, but these were higher than I think anybody expected…We’re just going to have to see where the inflation data fall out.”

With the clock ticking down to the election, this is not the news the White House wants, nor is it where they expected to be at this point. This report complicates the Biden team’s economic narrative that the President’s policies are working.

Last week’s disappointing GDP news and uptick in a key inflation gauge (Personal Consumption Expenditures) have up-ended Wall Street hopes for an imminent rate cut. The news was also a major setback for the White House, which is desperate to put inflation behind them in time for the election. Reflecting what inflation reports have shown, the electorate has picked up on the warning signs of an inflation resurgence.

From our new survey for Winning the Issues (April 27-29), there has been an increase in the percentage saying inflation is getting worse — now at 60% — rather than better (16%) or not changing (21%).

At the end of last year, numbers had improved slightly, with 24% saying inflation is getting better and 53% saying worse. But our current numbers show the highest percentage saying “worse” (60%) since September 2023. The last inflation reports have shown inflation remaining at or above 3% for ten months in a row. With the unexpected uptick in PCE, this has now caused a re-examination of the inflation situation as potentially rebounding.

Some like progressive economist Paul Krugman declared victory months ago, dismissing any remaining concerns about inflation as purely a function of partisanship. Our numbers show that Republicans (82% worse) and independents (61%) are overwhelmingly of the view that inflation is getting worse, but with even a plurality of Democrats (39%) seeing inflation as getting worse instead of better (30%).

With six months to go until the election, the White House has been eager to change voters’ minds about inflation improving thanks to the President’s policies, but our numbers show their views moving in the opposite direction.

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.

The Bureau of Labor Statistics March 2024 Consumer Price Index was released this morning, and came in at a higher than expected year over year rate of 3.5%. This was the 36th month in a row of a 3% or higher inflation rate starting the month after the American Rescue Plan was signed into law. Today’s report almost guarantees the Federal Reserve will hold off on cutting interest rates longer than Wall Street hoped.

Under President Biden, prices have risen 19.4% since he was inaugurated. Contrasting him with the seven prior presidents at the same point in their presidencies, only Carter (36.9%) had a larger increase. The same is true for food where Biden has seen a 21.1% increase in food prices, surpassed only by Carter (34.9%).

While there have been claims about how much gas prices have come down, in looking at the totality of Biden’s tenure, prices have gone up 47.8%. But in this category, two presidents have come in higher: Obama (113.5%) and Carter (104.6%).

For those that have moved to electric vehicles, the cost of electricity has increased as well.
Since Biden’s inauguration, electricity prices have gone up 29.3%. No matter the type of car or truck you might own, the cost to operate it has increased dramatically.

Finally, a critical contrast is that since Biden’s inauguration, weekly wages have increased 14.2%, meaning that wages trail inflation by 5.2%. At the same point in time for under Trump, weekly wages had increased 9.4%, meaning wages had outpaced inflation by 3.1%.

With only seven months to go before the election, today’s inflation report was not good news for the White House. The data indicates there is more work to be done to put inflation behind us.