The U.S. Labor Department released its monthly inflation data on Wednesday, painting a worrying picture of the state of the American economy.
Consumer prices across the board rose 3.5% in March, exceeding economists’ predictions and outpacing February’s 3.2% increase. The consumer-price index, which measures the price of goods and services across the economy, rose by 0.4% compared to this time last year.
According to analysts, this news will make it increasingly unlikely for the Federal Reserve to cut interest rates at its upcoming June meeting. Fed chair Jerome Powell has expressed cautious optimism about achieving a “soft landing” for the U.S. economy by gradually cutting rates as consumer spending cools, but this recent inflation report may complicate those plans. The stock market reacted to the news with futures falling and yields on treasury bonds climbing.
This inflation data follows a strong jobs report released last Friday, in which employers reported adding around 300,000 new positions. This suggests that the current rate hikes are not doing enough to slow economic growth. Trillions of dollars that were pumped into the economy during the pandemic continue to circulate, leaving the Fed with few options beyond waiting for a significant change in the economy.
Some are pointing to President Joe Biden’s economic policies, dubbed “Bidenomics,” as a potential reason for the current state of the economy. Axios reported earlier this month that the White House has largely stopped using the term to describe the president’s stewardship of the economy. Republicans have been quick to mock the president’s failure to bring inflation rates back to pre-pandemic levels, while Democrats like Rep. Jim Clyburn see his focus on economics as out of touch with the everyday struggles of Americans.
During a recent event in North Carolina, President Biden defended his economic plans, stating that leading economists are no longer making jokes about “Bidenomics” and are starting to believe in its effectiveness.
“They’re thinking maybe it works!” he exclaimed. However, some Democrats like Rep. Clyburn have expressed concerns that Biden’s policies are not addressing the immediate needs of Americans, such as education, feeding their families, and building their communities.
The White House has pointed to the North Carolina event as an example of President Biden’s continued use of the term “Bidenomics” to describe his economic plans. However, the decrease in his monthly usage of the term from 29 to just once over the past 12 months is notable. It suggests that the administration may be trying to distance itself from the term as it becomes increasingly associated with rising inflation rates.
Overall, this inflation report highlights the challenges facing the Biden administration as they work to navigate the U.S. economy out of the pandemic. With rising inflation rates and concerns about the Fed’s ability to control them, it is becoming increasingly evident that “Bidenomics” may not be the solution to the current economic issues facing Americans.
As the administration continues to face criticism from both sides of the political spectrum, it remains to be seen how they will address these concerns and work to improve the state of the economy for all Americans.
