(FiveNation.com)- President Joe Biden might claim that America is getting “back on track” but the economy says otherwise. Rising prices across the country, on all kinds of products, is putting pressure on his administration and the Federal Reserve to take action and stop inflation from completely derailing the economic recovery that began under the Trump administration.
A huge surge of consumer demand hit the U.S. economy after the government issued more stimulus checks, but with millions of Americans still at home and taking unemployment benefits, the economy has been thrown out of balance. Meanwhile, manufacturers and other industries hit hard by the COVID-19 recession are struggling to get back to normal operations. It means that there is a shortage of supply of many consumer goods, raising prices across the board.
The situation resulted in the Consumer Price Index (CPI0 rising by 0.8% in April, and by some 4.2% over the past year. It’s the quickest annual increase since 2008, the time of the last economic crash during the Obama administration – that’s according to data released by the Labor Department earlier this month.
And if you discount the volatile prices of energy and food, the index saw its biggest monthly increase since, wait for it…1982! There’s good reason to remove energy and food, too, as these prices are affected by many things – including the recent hacking of the Colonial Pipeline by Russian criminals.
George Selgin, an economic policy expert from the CATO Institute, said that April’s numbers show that people are spending more aggressively than forecasters had anticipated.
“There are some adverse supply shocks going on, some of which affected the April numbers, but the big story is the pent-up demand and purchasing power that people have finally started to dispose of,” he said.
And when people want to spend, the economy needs to keep up with supply – otherwise prices go up.
The question now is…how will President Biden handle it? Continued unemployment benefits will encourage people to stay home and make it harder for business to increase supply. Maybe now’s the time the Democrats swallow their pride and do the right thing…and get people back to work!