Reject White House’s Stockholm Syndrome: Inflation is still painfully high

The Biden White House didn’t understand the pain of inflation nearly two years ago, when President Biden’s then-chief of staff Ron Klain described supply-chain delays and inflation as “high class problems.” 

Now, nearly two and a half years into the Biden administration, households are suffering under a $5,600 effective pay cut due to inflation. Yet given the more recent downturn in inflation, the Biden White House has far less reason to boast than it claims. 

The consumer price index (CPI) grew by 3% last month, which is a steep drop below the inflation of 9.1% last summer, the highest seen since 1981, but still above the Federal Reserve’s 2% target. More importantly, a sharper measure of inflation is the median consumer price index, or median CPI. That was 6.44% in June—more than double the standard CPI. 

The Federal Reserve Bank of Cleveland explains why this median CPI metric is more useful, and why it explains why so many families are still suffering: “According to research from the Cleveland Fed, the median CPI provides a better signal of the underlying inflation trend than either the all-items CPI or the CPI excluding food and energy. The median CPI is even better at forecasting PCE inflation in the near and longer term than the core PCE price index.”

The Committee to Unleash Prosperity gives more context:

Just as we’ve been forecasting for months, the official inflation rate (CPI) fell to 3.0 percent in June – the lowest rate in two and a half years. That’s good news – especially when considering that this time last year inflation had soared to above 9%. Prices are roughly 16% higher today than when Biden entered office and that is a steep tax on Americans’ earnings and savings.

 

Polls over the past year consistently show that Americans don’t believe that inflation has fallen as much as is reported.

 

Why the big discrepancy between public perception about what is happening with prices and the government’s “official” numbers? One answer may be found in the Federal Reserve Bank of Cleveland statistic called median CPI, which “omits outliers” with wild price shifts. The chart below shows the difference between the two inflation numbers.  

 

The orange line shows that the median CPI is now running roughly twice as high as the monthly CPI numbers. The things people have to pay for every day or week like gas, food, rent, and electricity are emphasized in the Cleveland Fed report. That may explain why consumers are still so angry these days about out-of-control price hikes. 

While the Biden White House thinks inflation is just a “high class problem,” most Americans say that’s out of touch. The median CPI helps explain why in a recent CNN poll conducted by SSRS, 66% of Americans disapprove of how Biden’s handled the economy, with 76% describing the economy as in poor shape.

Instead of coming after our gas stoves and plastic straws, the Biden administration should be making life easier and more affordable by unleashing domestic energy supplies, cutting small business red tape, and firing Lina Khan, chair of the Federal Trade Commission, who seeks to impose her costly and radical ideas on the private sector while flagrantly disregarding the law—hurting American jobs and consumers in the process.