On Sunday, President Joe Biden expressed optimism about the country’s economy, saying America will be able to rein in historically high inflation.
He also expressed hope that the Federal Reserve would achieve a “soft landing” by slowing economic growth without sliding into a recession.
“I’m telling the American people that we’re going to get control of inflation,” Biden said on CBS 60 Minutes Sunday night.
In 2020, US inflation hit its highest level since the early 1980s.
Factors such as the pandemic, supply chain issues and the Russian invasion of Ukraine have impacted the global economy.
According to the latest consumer price index, the annual inflation rate has recently started to decline and stood at 8.3% for the year ending August, the second month of decline.
In June, CPI hit 9.1% yoy, the highest inflation rate in four decades.
However, the August CPI report also showed a higher-than-expected 0.1% month-on-month increase.
Economists predicted a decline and stock prices fell as a result, with the three major US indices having their worst day in more than two years.
Biden tried to put out the fire and expressed his optimism that the worst could be over, saying:
“Let’s put this in perspective [The] inflation rate month-to-month was just an inch, hardly at all.”
Solutions and price increases
President Joe Biden also highlighted his administration’s gains in the job market, citing the 10 million new jobs added since he took office.
He also highlighted his government’s investment in the semiconductor industry.
“In the meantime, we created all these jobs and prices have gone up, but they’ve come down for energy,” he said.
Falling energy prices have had an impact on lowering headline inflation, but increases in food and housing prices remain high.
Economist and professor Sung Won Sohn of Loyola Marymount University said:
“If you look at the underlying trend — I look at labor costs and rent increases — they both are pointing in the wrong direction and going up at hefty paces.”
However, other inflation measures cast a positive light.
A day after the CPI, the August producer price index showed substantial drops in the average change in prices paid to producers as supply chain problems vanished and high energy prices stopped dripping into the economy.
Regardless, the main factors contributing to and distracting from inflation were beyond Biden’s and the Fed’s control.
Despite the central bank’s efforts to tighten monetary policy to dampen demand, Fed officials are unable to address the supply side, which could keep inflationary pressures low.
This week, the Fed’s decision-making committee will meet to determine the next steps in the fight against inflation.
Economists speculate that the Fed will raise interest rates by 75 for the third consecutive time.
In the fight against inflation, however, there are fears that massive rate hikes by the Fed could send the country’s economy into recession.
During the “60 Minutes” interview, Biden said he doesn’t believe the economy will deteriorate until it improves.