Economy experts are predicting a crisis President Biden As the nation approaches the November general election, his administration has little time left to fix the stubbornly high inflation plaguing Americans.
Inflation is currently at 3.3% year over year, according to Labor Department data. Although down from the record high of 9.1% in June 2022, it is still higher than at any point in the past decade before Biden took office.
The Federal Reserve announced on Wednesday that it Maintain the federal funds rate ceiling At 5.5% from 5.25%, where rates have been steady since last July, it is an expected decision, as inflation for the 12 months ending in May rose less than expected and the core consumer price index rose a better-than-expected 3.4%.
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From left: Former President Trump, Federal Reserve Chairman Jerome Powell and President Biden. (Getty Images/File)
Fed Chair Jerome Powell He said the report builds confidence that inflation is moving toward the 2% target, but he also said more evidence is needed before the central bank can ease policy.
Economist Peter Morrissey He said the report is “definitely good news” for Biden, but added that “prices are still up, and this is just a report.” He also pointed to factors that influenced the report, as they are not affordable issues for most Americans.
“(This report) is mainly driven by falling energy prices. Inflation in the services sector is still very high. Housing and shelter costs are rising by 5% per year,” he said. He also said energy prices fluctuate and can change a lot in a single month.
“The underlying sources of inflation that trouble the Fed are still there. The Fed will not be able to cut interest rates much this year, and even if it does, it will be too late to provide much help to Joe Biden.”
Economist Peter Morrissey. (Fox News/File)
Joseph LavorgnaThe economist who served as former President Trump’s head of economic counsel told Fox that he does not think inflation is going to slow down, but he also said before the report that the Fed “does not want a quick reaction.”
“If I were advising the president, I would want to do something to reduce inflation as much as possible,” he said. “I would argue that the administration has pursued policies that have unfortunately made inflation worse.”
“Never in the history of the economy have we run a budget deficit greater than 5% of GDP while unemployment is under 4%. That’s a recipe for high inflation, which is what we have,” he said. “I’m concerned that the only way to get inflation down, at least to the point where people aren’t feeling the pain of higher prices, is, unfortunately, a recession.”
Dr. Arthur LafferThe economist, who served in both the Reagan and Trump administrations, said he couldn’t predict how the economy and inflation would affect the overall outcome of the upcoming election, but argued the Biden administration has broken major “states of the art” of economics by moving in the wrong direction on taxes, government spending, monetary policy, regulation and trade.
Arthur Laffer. (Jim Watson/AFP via Getty Images/File)
“When I look at the ‘five kingdoms,’ taxation, it’s moving in the wrong direction. Government spending? It’s moving in the wrong direction. Hard currency? It’s moving in the wrong direction. Regulation is moving in the wrong direction, particularly in energy, but other things as well. Trade? It’s moving in the wrong direction,” Laffer said.
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“I can’t imagine an administration that disagrees with what needs to be done, and the consequences are very clear,” he said. “The employment population hasn’t returned to what it was before the pandemic. Prices are up. Interest rates — I could just say more. As an economist, that’s how I look at them objectively. (Biden) doesn’t know economics and neither does his administration.”
When it comes to elections, however, Laffer said you “have to get out your Ouija board.”
Fox Business’ Nora Colomer contributed to this report.
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