President Joe Biden is barnstorming the country touting his “Bidenomics,” even though his policies are failing, sparking painful inflation that’s eroding real wages and causing widespread, effective household pay cuts.
The Biden White House didn’t understand the pain of inflation nearly two years ago, when Biden’s then-chief of staff Ron Klain described supply-chain delays and inflation as “high-class problems.”
Now, nearly 2 1/2 years into the Biden administration, it’s clear this administration still doesn’t understand the financial hardship the public is being forced to endure. Households are suffering under a $5,600 effective pay cut due to inflation, and prices are about 16% higher today than when Biden took office, ravaging the public’s earnings and savings.
Even with the more recent downturn in inflation, the Biden White House has far less reason to boast than it claims. The consumer price index grew by 3.2% in July, 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 6.09% on July, nearly double the standard CPI.
The Committee to Unleash Prosperity gives more context: “Just as we’ve been forecasting for months, the official inflation rate (CPI) fell … That’s good news — especially when considering that this time last year inflation had soared to above 9% … 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 Federal Reserve Bank of Cleveland explains why this median CPI metric is more useful and why it explains the polls over the past year that consistently show the public doesn’t believe that inflation has fallen as much as is reported: “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.”
While the Biden White House thinks inflation is just a “high-class problem,” most say that’s out of touch. The median CPI helps explain why just 37% approve of Biden’s handling of the economy, according to CNN polling. Even fewer approve (30%) of his handling of inflation. They recognize that Biden’s signature legislative packages, such as the American Rescue Plan and the Inflation Reduction Act, spiked inflation and are failing to bring it back down. This increased government spending has triggered more inflation, eroding wages and buying power. The White House is also bragging about an uptick in nominal wages, but real wages haven’t recovered to pre-pandemic levels even as they are starting to rise. That’s right: real wages, not imaginary wages. Biden needs to join reality.
Families are stretching their dollars further each day since their paychecks and retirement funds are worth far less than they were when Biden first took office. CNBC reported a shocking 54% of the public reported using savings to pay for everyday expenses such as groceries and rent. Savings are down, as is economic confidence.
Instead of defending a failed economic agenda that has made life for the public worse, the Biden administration should focus on making our lives easier and more affordable by unleashing domestic energy supplies, cutting the red tape that burdens small businesses, and reining in out-of-control federal regulators, such as Lina Khan, chairwoman of the Federal Trade Commission, who seeks to impose her costly and radical ideas on the private sector while flagrantly disregarding the law. Otherwise, Bidenomics will continue hurting jobs and consumers.