The White House has said there is “progress” in the fight against inflation despite September data showing the country’s annual rate of 8.2 percent being higher than the initial projection. In September, The rate was lower than August’s 8.3 percent but higher by 0.1 percent than the initial projection.
President Joe Biden’s economic team at the White House said that the country remained “in a strong position to bring down inflation and maintain a resilient job market.” Biden emphasized that in Q3, the average inflation was two percent, down from 11 percent in the second quarter. He also maintained that the U.S. was not the only country facing an economic crisis as it was a global phenomenon.
The administration’s current economic goal is to bring stronger investments and overall growth. The president, however, acknowledged that Americans were “squeezed by the cost of living.”
“It’s been true for years and folks don’t need to read the report to tell them they’re being squeezed,” Biden added. “Fighting this battle every day is a key reason why I ran for President of the United States.”
The September consumer price index (CPI) released on Thursday revealed that the U.S. struggled with higher prices despite consecutive interest rate hikes by the Federal Reserve in recent months. The monthly increase in overall consumer price was 0.4 percent from August.
Analysts noted that declining inflation partially occurred due to the fall in energy costs. For 98 consecutive days in the summer, the average cost for gas was $3.68 per gallon, falling from a record $5 per gallon. However, fuel prices in the past month increased to $3.91 per gallon. On the other hand, food and housing prices soared.
The U.S. futures market initially plunged after the release of the September CPI report but saw gains later in the day. S&P 500 futures had fallen 1.8 percent, Dow futures plummetted 1.5 percent and Nasdaq futures tumbled 2.6 percent,
The volatile economy and fears of a recession among people put Biden’s administration at risk for the upcoming midterm elections. Analysts said that the administration had failed to stabilize the deceleration in inflation, which should be a priority leading up to elections.
Voters consider the economic situation and inflation “critical issues.” A CNN poll revealed that 90 percent of registered voters believed the economy was an important deciding factor in determining their choices. Eighty-four percent of voters also considered inflation as another crucial deciding factor.
The Fed applies interest rate hikes to slow inflation, and the bureau uses market data to determine the next move. In September, the Fed implemented a 75 basis points rate increase for the third consecutive time.
Biden’s administration has provided the central bank the autonomy to decide on the next course of action without political disruption. Stakeholders, however, noted that the aggressive pace of interest rate hikes had increased the likelihood of a recession in the U.S. They also said there would be adverse effects on the lower-and-middle income class.
The president insisted that the U.S would not have a recession despite warnings from economists.
“If it is, it will be a very slight recession. That is we’ll move down slightly,” Biden said.” “It is possible. Look, it’s possible. I don’t anticipate it.”