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Thursday, March 7, 2024

Perceptions of the Economy

 Louis Jacobson at PolitiFact:

The biggest albatross for Biden’s economy is inflation.

Year-over-year inflation peaked around 9% — a four-decade high — in summer 2022. It has fallen to about 3% in recent months, closer to the Federal Reserve’s 2% target. Economists generally attribute the peak inflation to supply chain problems that emerged during the pandemic; this was exacerbated by fiscal stimulus legislation signed by Biden shortly after he took office.

Americans "want these prices to be back where they were before the pandemic," Federal Reserve Board member Lisa Cook said in a November speech at Duke University.

The problem is that, by nature, inflation doesn’t act that way. When inflation slows, as it has for a year and a half, it doesn’t produce lower prices. Rather, prices climb more slowly, allowing wage increases to catch up.

Americans have noticed that food prices are up 20% on Biden’s watch.

"Most people shop for groceries every week, making those prices particularly salient," A. Lee Hannah, a Wright State University political scientist who has written about consumers’ views of the economy, told PolitiFact.

Another weekly ritual is a trip to the gas station. Although gasoline prices have fallen substantially from their summer 2022 peak, they remain about 30% higher than when Biden took office.