Biden Takes a Breather, Says "My Economic Plan Is Working" as CPI Increase Slows Down

[Image source=EPA Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] U.S. President Joe Biden gave a positive assessment that inflation shows signs of easing after the consumer price index (CPI) increase for last month, announced on the 10th (local time), slowed down. Facing a crisis of plummeting approval ratings due to soaring inflation ahead of the midterm elections in November, President Biden seemed to breathe a sigh of relief. He also added that these signs of easing inflation are evidence that his economic plan is working.

In a White House speech that day, President Biden stated, "We are seeing signs that inflation can ease." The U.S. Department of Labor announced that the July CPI rose 8.5% compared to the same month last year. This is a significant slowdown from the previous month (9.1%), which was the largest increase since November 1981. It also fell short of experts' expectations (8.7%). Additionally, the inflation rate compared to the previous month showed 0% increase.

President Biden emphasized, "People are still suffering," but added, "Last month's inflation was zero." He reiterated that inflation is slowing down and evaluated, "This is proof that my economic plan is working." He also did not forget to praise the strong labor market, including a surge in jobs.

These figures are considered good news for President Biden and the Democratic Party, who had been struggling with inflation ahead of the midterm elections. It is also positive for the Federal Reserve (Fed), which is continuing its interest rate hike cycle, as it shows the policy effects are appearing. The New York Times (NYT) reported, "While sharp inflation burdens consumers and erodes voter sentiment, the July CPI is welcome news for the White House and the Fed." Bloomberg News also evaluated, "It will be helpful for President Biden ahead of the midterm elections." In a poll released by Reuters that day, President Biden's approval rating rose slightly to 40%. This is a 4 percentage point increase compared to May, the lowest point in history, and a 1 percentage point increase compared to the previous month.

However, there are also criticisms that the indicators released that day are insufficient to be seen as a definite signal that inflation has peaked. This is the same context as the warning from Loretta Mester, President of the Cleveland Federal Reserve Bank, who said, "It would be a mistake to declare victory (in the fight against inflation) too early."

President Biden strongly urged the passage of the so-called 'Inflation Reduction Act,' which is currently undergoing congressional processing. This bill, which invests large-scale funds in climate change response, energy security, and drug price reduction, passed the Senate earlier and is scheduled for a House vote around the 12th. Since the Democrats control the House, the bill's passage is virtually certain.

Meanwhile, major foreign media reported that President Biden plans to take a summer vacation to South Carolina and Kiawah Island. The White House also confirmed these vacation plans. However, specific vacation schedules were not disclosed.