Tag Archive for: inflation

High Consumer Prices among Top Concerns as Voters Lose Confidence in Biden, Polls Show

As new polls indicate that American voters remain worried about the persistently high cost of goods and have largely lost confidence in President Joe Biden’s handling of the economy, a leading economist is pointing out that the economies in red states that feature free market policies are outpacing the economies of blue states.

An NBC News poll published Sunday revealed that Biden lagged behind former President Donald Trump by over 20 points on the question of “which candidate would better handle the economy.” Overall, the poll found that Biden’s approval rating has reached the lowest point of his presidency at 37%.

The survey comes as voters say that the economy is among their top concerns going into the November elections. A recent Harvard CAPS-Harris poll found that inflation was the primary worry for 32% of respondents, a close second behind the border crisis at 35%.

While inflation has largely leveled off since reaching a high of 9.1% in June 2022, consumers are still worried about the persistent rising costs of virtually all goods since the 2020 pandemic that have not come back down. As reported by CNN, “More than 90% of the items tracked in the Consumer Price Index are more expensive than they were in February 2020, with most price increases landing north of 20% and some (fuel and margarine) approaching 55%.” Overall, food prices have risen almost 25%.

Stephen Moore, distinguished fellow in Economics at The Heritage Foundation, joined “Washington Watch” last week to discuss the current economic outlook in America.

“What’s happening in America today is you’ve got red states with low taxes, less regulation, [and] right-to-work that are doing extraordinarily well,” he explained. “You know, they’re actually booming [in] Texas, Florida, Tennessee, Utah, Idaho. So many of these states, [like] South Carolina, the southern states are doing amazing. … [B]y the way, the South now is the number one leading region in the economy. It used to be the northeast for 100 years. But the northeast is losing its people, its businesses, its capital. And they’re going to states like Florida and Texas and Arizona … because the taxes are lower [and] there’s a more pro-business atmosphere. They follow free market policies. That’s what American businesses want. That’s what workers want.”

Moore, who also serves as a senior economist at FreedomWorks, went on to argue that the Biden administration’s federal spending policies have negatively affected the economy.

“[T]he question becomes, ‘Why don’t we do, on the national level, what works in the states? Why don’t we cut our taxes, reduce our regulations? Why don’t we get our budget under control?’ We’re running a $1.5 trillion debt. … It’s because we’ve got a president who is spending and printing and borrowing a trillion and a half dollars a year — it’s as obvious [as] the sun ris[ing] in the East and set[ting] in the West when you have that kind of out of control spending. You know what? You’re going to get inflation.”

At an event last week, Biden accused grocery stores of “ripping people off” through “price gouging, junk fees, greedflation [and] shrinkflation.”

“That’s the way all these Democrats are,” Moore responded. “They keep saying, ‘Oh, the profits are too high.’ Why don’t you go out there and show you can make a profit? It ain’t so easy to do it. These are businesses that are providing jobs, providing growth for our economy, putting food on our table. I’m sick of him criticizing American businesses.”

AUTHOR

Dan Hart

Dan Hart is senior editor at The Washington Stand.

EDITORS NOTE: This Washington Stand column is republished with permission. All rights reserved. ©2024 Family Research Council.

The Washington Stand is Family Research Council’s outlet for news and commentary from a biblical worldview. The Washington Stand is based in Washington, D.C. and is published by FRC, whose mission is to advance faith, family, and freedom in public policy and the culture from a biblical worldview. We invite you to stand with us by partnering with FRC.

Inflation Under Biden Hiked The Massive National Debt In A New Way In 2023, Experts Say

Interest rate hikes to combat sky-high inflation under President Joe Biden have led the Federal Reserve to run over a hundred billion dollar deficit, adding to the national debt, experts told the Daily Caller News Foundation.

The Federal Reserve in past years has operated a net surplus, remitting those excess earnings to the Treasury to pay off the national debt, according to a press release from the Fed. In 2023, following an inflation-driven increase to the federal funds rate, the interest rate that the central bank has to pay to commercial banks that are holding excess cash overnight, the Fed began losing money, which the Treasury has to issue debt to pay, according to experts who spoke to the DCNF.

“The Fed’s losses do contribute to the deficit,” George Selgin, director emeritus of the Center for Monetary and Financial Alternatives at the Cato Institute, told the DCNF. “Normally, the Fed saves the government money by sending most of the interest it earns on its securities back to the U.S. Treasury. But because the Fed now pays interest on banks’ reserves, when the rate it pays goes up, its remittances to the Treasury go down, and lately the rate it pays has risen so much that this past year alone it owed banks more than $100 billion more than it earned. Until it makes up for this loss and also for losses from the previous few years, which could take a long time, it won’t be sending anything to the Treasury.”

The Fed was able to remit around $79 billion to the Treasury in 2022 before having to take out $16.6 billion in debt by the end of the year as rising interest rates took hold, later losing $114.3 billion in 2023, according to the Fed press release. The Treasury received $109 billion, $86 billion, $54.9 billion and $62.1 billion from the Fed in 2021, 2020, 2019 and 2018, respectively.

The rates that the Federal Reserve pays on the overnight reserve balances held by commercial banks have risen in accordance with hikes in the federal funds rate, which the Fed has put in a range of 5.25% and 5.50%, the highest rate in 22 years, in response to high inflation that peaked at 9.1% in June 2022 under Biden. Inflation has since moderated to 3.4% as of December — still not at the Fed’s 2% target, but enough to prompt a median of Fed governors to predict three rate cuts before the end of 2024.

“The Fed’s rate hikes are supposed to counter inflation by raising the cost of borrowing, which is supposed in turn to cause people to borrow and spend less,” Selgin told the DCNF. “But the same hikes add to the government’s deficit, by reducing the Fed’s Treasury remittances, but mainly by raising the interest the Treasury has to pay on its shorter-term obligations. So unless the government cuts spending, the rate hikes can fail to counter inflation, and might even aggravate it, and the public bears the double burden of higher rates and high, if not higher inflation.”

Many economists point to high-spending policies for a portion of the inflation that has plagued Americans under Biden. Biden signed the American Rescue Plan in March 2021 and the Inflation Reduction Act in August 2022, authorizing $1.9 trillion and $750 billion in new spending, respectively.

The U.S. national debt exceeded $34 trillion for the first time in the country’s history on Dec. 29, 2023, with around $27 trillion being held by the public and the other more than $7 trillion being intergovernmentally held. For Fiscal Year 2023, the federal government ran a budget deficit of around $2 trillion when the president’s failed student loan forgiveness plan is properly accounted for, compared to $1 trillion in the previous fiscal year.

“The reason it has losses is that the Fed printed money to buy federal debt,” Richard Stern, director of the Grover M. Hermann Center for the Federal Budget at the Heritage Foundation, told the DCNF. “Then, when it stopped printing money to buy more debt, new federal deficits fell onto the private money markets. This triggered crowding out and the ensuing interest rate surges we’ve seen. Then the interest rate spike reduced the market value of the existing debt that the Fed is holding — that’s what the losses are.”

Net interest payments on the national debt have also increased rapidly as rates have risen, with any new Treasury debt issued having to be at a much higher interest rate, costing more to maintain and hold. In the first quarter of 2021, when Biden first took office, interest payments totaled around $535 billion, which has grown to more than $980 billion as of the third quarter of 2023, according to the Federal Reserve Bank of St. Louis.

“I’d say that the losses are indicative of the inflationary money printing used to cover Biden’s spending and just one more example of where the government is using inflation and interest rate manipulation to cheat bondholders and steal from hard-working Americans,” Stern told the DCNF.

The White House did not respond to a request to comment from the DCNF.

AUTHOR

WILL KESSLER

Contributor.

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EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved.


All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.

Inflation Soars As High Prices Continue To Squeeze Americans

Inflation rose year-over-year in December, even as the Federal Reserve projects interest rate cuts by the end of the year, according to the latest Bureau of Labor Statistics (BLS) release on Tuesday.

The consumer price index (CPI), a broad measure of the prices of everyday goods, increased 3.4% on an annual basis in December and 0.3% month-over-month, compared to 3.1% year-over-year in November and above expectations of 3.2%, according to the BLS. Core CPI, which excludes the volatile categories of energy and food, remained high, rising 3.9% year-over-year in October, compared to 4.0% in November.

Inflation rose year-over-year in December, even as the Federal Reserve projects interest rate cuts by the end of the year, according to the latest Bureau of Labor Statistics (BLS) release on Tuesday.

The consumer price index (CPI), a broad measure of the prices of everyday goods, increased 3.4% on an annual basis in December and 0.3% month-over-month, compared to 3.1% year-over-year in November and above expectations of 3.2%, according to the BLS. Core CPI, which excludes the volatile categories of energy and food, remained high, rising 3.9% year-over-year in October, compared to 4.0% in November.

“It was unseasonably warm in December, which boosted gasoline prices enough to send the monthly headline number up a bit,” Peter Earle, economist at the American Institute for Economic Research, told the Daily Caller News Foundation. “Disinflation is continuing, but the last percent or two down to the Fed’s target range are going to be tougher to nail down.”

Shelter contributed the most to the monthly gain, with prices rising by 0.5% for the month and 6.2% for the year, according to the BLS. Prices for energy rose 0.4% for the month, reversing the trend of declining energy prices that stands at -2% for the year.

Prices for motor vehicle insurance continued to trend up, rising 1.5% in the month following an increase of 1% in November, according to the BLS. The index for food also had a similar increase in November of 0.2%, totaling 2.7% year-over-year.

“It was unseasonably warm in December, which boosted gasoline prices enough to send the monthly headline number up a bit,” Peter Earle, economist at the American Institute for Economic Research, told the Daily Caller News Foundation. “Disinflation is continuing, but the last percent or two down to the Fed’s target range are going to be tougher to nail down.”

Shelter contributed the most to the monthly gain, with prices rising by 0.5% for the month and 6.2% for the year, according to the BLS. Prices for energy rose 0.4% for the month, reversing the trend of declining energy prices that stands at -2% for the year.

Prices for motor vehicle insurance continued to trend up, rising 1.5% in the month following an increase of 1% in November, according to the BLS. The index for food also had a similar increase in November of 0.2%, totaling 2.7% year-over-year.

The current rate of inflation stands in contrast to the Fed’s target rate of 2%, which it aims to achieve through its use of its federal funds rate, which it has set in a range of 5.25% and 5.50%, the highest point in 22 years, in response to soaring inflation under President Joe Biden, which peaked at 9.1% in June 2022. In their last Federal Open Market Committee meeting, a median of Fed governors estimated that the federal funds rate would be around 4.6% by the end of the year, indicating around three rate cuts.

The CPI report comes less than a week after the BLS announced that the economy added 216,000 nonfarm payroll jobs in December, despite revising the number of jobs down in October and November by a collective 71,000. In total, the number of jobs was revised down by 749,000 in 2023, around one-quarter of those initially announced.

“Right now, the Fed is projecting three rate cuts in 2024, while futures are suggesting five or six,” Earle told the DCNF. “I think that as long as the general price level keeps falling, the Fed will stick to its 75 [basis point] cutting plan. But if we get clearer signs of a slowdown in the late spring and early summer, we may indeed see four or five cuts this year.”

AUTHOR

WILL KESSLER

Contributor.

RELATED ARTICLE: Banks Making Easy Money Off Crisis Gov’t Program Designed To Bail Them Out

EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved.


All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.

The Polls For Joe Biden Might Even Be Worse Than You Think

  • While President Joe Biden continues to lag behind former President Trump in national and battleground state polls, his poll numbers are even worse on several key issues he’ll need to gain ground on to win reelection.
  • Biden is polling behind Trump on key questions on who voters benefited from most while in office, who they trust to handle top issues and who they believe is best fit to serve another term, according to recent polling.
  • “All of these polls point to voters having already decided against Biden on the current merits,” Jon McHenry, a GOP polling analyst and vice president at North Star Opinion Research, told the Daily Caller News Foundation. “They just don’t think he’s up to the job, whether we’re asking about traits like stamina and sharpness or about policies like the economy and immigration.”

As President Joe Biden continues to poll behind former President Donald Trump for a potential head-to-head matchup in 2024, recent surveys indicate he is also faring much worse than the Republican on issues that are most important to voters.

Trump has been trending ahead of Biden in national and crucial battleground state polls a year out from a hypothetical rematch, and is currently up by 3.2 points in the RealClearPolitics (RCP) average. Additionally, Biden is down by double digits against Trump on questions of basic presidential competency, including the handling of voters’ top issues and concerns over the Democrat’s age, according to recent polling data.

“He should be worried, and Democrats more generally should be worried,” Dr. Charles Bullock, elections expert and political science professor at the University of Georgia, told the Daily Caller News Foundation. “The kinds of issues that Biden is trailing Trump on seem to be the issues that are foremost on most peoples’ minds.”

A Wall Street Journal survey released on Dec. 9 found that only 23% of voters believe Biden’s policies have helped them, compared to nearly 50% who said the same of Trump’s administration.

Ron Faucheux, president of nonpartisan polling firm President of Clarus Research Group, believes this statistic is “the worst omen for Biden,” and told the DCNF “this contrast is deadly” ahead of 2024.

“When Democrats decided to package their economic policies under the single label, ‘Bidenomics,’ it backfired, and gave a name to something voters neither liked nor trusted,” Faucheux said.

Inflation has spiked under the Biden administration, which many critics attribute to the president’s record spending advanced by congressional Democrats. The Inflation Reduction Act, the American Rescue Plan, the Infrastructure Investment and Jobs Act and other pieces of Biden’s economic agenda are responsible for green-lighting trillions in spending.

The WSJ poll found that Biden was down by double digits against Trump on who voters trust to handle issues relating to the economy and inflation, as well as immigration, crime and the wars in Ukraine and Israel.

Recent battleground state polling has affirmed the national surveys, finding that Biden is far behind Trump on key issues voters are concerned about going into election year.

A Morning Consult/Bloomberg survey published Thursday shows that across seven swing states — Arizona, Georgia, Wisconsin, Michigan, Pennsylvania, Nevada and North Carolina — 51% of voters said the country’s economy was better off under Trump compared to 34% under Biden. The numbers were nearly identical when asked if they’re better off financially now than they were when Trump was president.

Trump also scored double-digits higher than Biden on who the electorate trusts to handle the economy, crime and immigration — which voters said were some of the most pressing issues to them ahead of 2024, according to the Morning Consult/Bloomberg poll.

CNN/SSRS polls in Michigan and Georgia released Monday indicated Trump scored far ahead of Biden for their respective “policy decisions on major issues.”

Another battleground state poll, conducted by Redfield & Wilton Strategies in Arizona, Georgia, Florida, North Carolina, Michigan and Pennsylvania, yielded similar results. In all of the states, Trump was ahead of Biden by double digits on issues concerning who “can get the economy going again” and “who will be tough on China.”

“The voters see the same decline for our country where we look weak. Where the economy’s bad, where our enemies are taking advantage of this weakness, and you’ve got a world where you’ve got really bad wars in Ukraine and now in the Middle East, and Biden can’t stop it,” John McLaughlin, CEO and partner of McLaughlin & Associates, which works closely with the Trump campaign, told the DCNF. “The sooner the election happens, the better off the voters will be, and the better off the country will be.”

Biden is also lagging far behind Trump on who voters believe are better fit to serve another term, given the current and former presidents are 81 and 77 years old, respectively.

Trump led Biden 45% to 29% on the question of who “is mentally up for the job” in the WSJ poll, and was ahead by 34 points on “physical stamina.”

An Economist/YouGov survey released Wednesday found that 55% of voters believe Biden’s health and age would “severely limit his ability to do the job,” while only 26% said the same of Trump.

The battleground state polls yielded similar results on the president’s sharpness, stamina and physical and mental health.

Bullock argued that Trump has been successful in messaging on the age issue, noting his “Sleepy Joe” nickname for Biden, posing a sharp contrast between the two men.

“It has taken hold, and it’s been augmented by some things, like when Biden stumbles or falls or that sort of thing,” Bullock told the DCNF. “Well, that kind of underscores, or reinforces, the message that Trump has been putting out.”

Additionally, polling suggests Trump fares better on some personal attributes that are essential to the presidency.

The Economist/YouGov poll found that only 36% of voters believe Biden is a strong leader, compared to nearly 60% who said the same of Trump. Biden was also down by double digits on questions of who the stronger leader is and who knows how to get things done in nearly all of the swing states Redfield & Wilton Strategies surveyed.

“All of these polls point to voters having already decided against Biden on the current merits,” Jon McHenry, a GOP polling analyst and vice president at North Star Opinion Research, told the DCNF. “They just don’t think he’s up to the job, whether we’re asking about traits like stamina and sharpness or about policies like the economy and immigration.”

The last time an incumbent president had nearly as low of an approval rating going into an election year as Biden does, it was Jimmy Carter in November 1979, according to Gallup. Biden’s most recent job performance score was at 37% in November, which is 3 points lower than Carter’s was just a year before he lost to Republican Ronald Reagan by nearly 10 points.

“As we move closer to the start of 2024, this may be the last opportunity for Biden to question his own political assumptions —and to decide not to run,” said Faucheux. “That would be the lighting strike that changes everything.”

The RCP average for a 2024 national Democratic and Republican primary, based on the most recent polling, indicates Biden and Trump are leading their respective fields with 68% and 60% support, respectively.

Neither Biden nor Trump’s campaigns responded to the DCNF’s requests for comment.

AUTHOR

MARY LOU MASTERS

Contributor.

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EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved.


All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.

‘Super Expensive’: NRCC Drops Video Targeting Dems For Thanksgiving Food Price Hikes

The National Republican Congressional Committee (NRCC) released a video Wednesday, first shared with the Daily Caller News Foundation, seeking to hold Democrats responsible for Thanksgiving food price increases ahead of 2024.

The online advertisement, titled “Thanksgiving in Biden’s America” and launched by the House GOP’s campaign arm, depicts how some of the feast’s staples “are more expensive again this year,” arguing that “you can thank Democrats” for the price increases. Local prices for canned cranberries, canned pumpkins and russet potatoes are all up 60%, 30% and 14%, respectively, since 2022, according to the NRCC.

“It’s super expensive and I’m sharing the cost with some of my siblings,” a grocery shopper can be heard saying in the video.

“Definitely more conscious about what we purchase,” another said.

WATCH:

Inflation has spiked under the Biden administration, which has been attributed by critics to record levels of government spending approved by Democrats. Biden signed the American Rescue Plan in 2021 authorizing $1.9 trillion in new funding for COVID-19 relief, as well as the 2022 Inflation Reduction Act, which added $750 billion to the deficit and sought to advance the president’s green energy agenda.

“Unsatisfied with their war on Christmas, extreme Democrats launched a war on Thanksgiving. That’s why your Thanksgiving meal costs skyrocketed,” Ben Smith, NRCC rapid response director, told the DCNF in a statement.

While the average cost for a Thanksgiving table of ten has decreased by 4.5% since 2022, the price is still up by 25% at $61.17 since 2019, according to a report from the American Farm Bureau Federation released Nov. 15. Last year’s average Thanksgiving feast saw a record-high price of $64.05 compared to $48.91 from before the COVID-19 pandemic.

The NRCC is seeking to expand its majority in the House by targeting 37 seats held by vulnerable Democrats, including several that will now be open in 2024 following a wave of departures in Michigan, Virginia and California.

AUTHOR

MARY LOU MASTERS

Contributor.

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EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved.


All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.

As Homeownership Costs Soar and Inflation Persists, Americans Sour on Biden’s Economy

President Joe Biden turned 81 years old on Monday, and he was greeted with the lowest approval rating ever recorded by NBC News at 40%. While a large part of the number is due to Democrats’ disapproval of Biden’s handling of the Israel-Hamas conflict, it’s also likely a reflection of an economy that continues to struggle under the weight of persistent inflation, skyrocketing mortgage rates, a decline in full-time jobs, and ever-expanding federal debt.

The president has continued to tout “Bidenomics” in recent weeks, despite stating last week that he acknowledges there is a “disconnect between the numbers and how people feel about their place in the world right now.” Polls show that the American public is indeed not connecting with the White House’s messaging on a massive scale. A Fox News survey taken last week revealed that almost 80% of Americans rate the economy negatively.

As economists are pointing out, the raw economic numbers are a tremendous cause for concern. Joel Griffith, a research fellow in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation, joined “Washington Watch” last week to give a snapshot of where things currently stand.

“The typical family has lost more than $4,000 in real inflation, just adjusted income since President Biden took office, and that $4,000 pay cut is not even taking into account the rising home ownership costs,” he observed. “… [A]s [we]’ve seen real income decline, we’ve also seen credit card balances hit an all-time record $1 trillion. That’s about a $3,000 a family increase over the past year and a half, even as savings rates have plunged near all-time lows. Bidenomics has been a disaster for American families.”

Polls show that Americans are continuing to feel economic pain when they compare their income with prices. An Associated Press poll last month found that “three-quarters of respondents described the economy as poor,” with two-thirds saying their expenses have risen and only one quarter saying their income had also gone up. Compounding the problem is that the prices of many of the items that Americans most commonly buy have inflated substantially. Since February of 2020, the average price of a gallon of milk is up 23% ($3.93), a pound of ground beef is up 33% ($5.35), and a gallon of gas is up 53% ($3.78).

As Griffith went on to explain, one of the primary reasons for the decline in real income currently being experienced by Americans is the exploding cost of home ownership.

“If you’re looking to get a mortgage right now on a standard middle class home, that mortgage payment is costing you about $1,000 per month more than it would have cost you just a year and a half ago,” he noted. “… These are the worst economic conditions since the 1970s. … [T]hat was a time when we also had declining real income, and we also had sky high inflation. So arguably, it’s even worse now than it was then because it’s never been less affordable to buy a home. If you look to buy a home, it costs you about half of your income just to make the mortgage payments and the property taxes. It has never been this bad in terms of home ownership.”

Griffith further illustrated how reported job growth numbers are misleading. “[E]very month, the Biden administration loves to tout these jobs growth numbers. But what they fail to tell us is actually that over the last six months, we’ve actually seen a decline in full-time jobs. The only reason why we have seen the top line jobs growth numbers positive is because we’ve seen a surge in part-time jobs, meaning we have a lot more people today working double jobs just to pay the bills.”

As the national debt approaches $34 trillion, Griffith underscored how runaway federal spending is leading to unyielding inflation.

“[S]pending is out of control — it’s been out of control a long time,” he said. “The interest we’re paying right now on the federal debt is $10,000 per family per year. The amount of money that we’ve borrowed over the prior year is $25,000 per family of four. We cannot keep this up. A big part of the reason why families today are suffering from this inflation … is because for the last three years, we have spent wildly beyond our means, and we relied on our central bank to print the dollars to buy that debt.”

“We have to change this trajectory now, and I’m hopeful Congress will actually attempt to do so once they come back from Thanksgiving and Christmas break,” Griffith concluded.

AUTHOR

Dan Hart

Dan Hart is senior editor at The Washington Stand.

RELATED ARTICLE: We Need to Talk about Joe: Dems Show Growing Concern over Aged, Inept Biden

EDITORS NOTE: This Washington Stand column is republished with permission. All rights reserved. ©2023 Family Research Council.


The Washington Stand is Family Research Council’s outlet for news and commentary from a biblical worldview. The Washington Stand is based in Washington, D.C. and is published by FRC, whose mission is to advance faith, family, and freedom in public policy and the culture from a biblical worldview. We invite you to stand with us by partnering with FRC.

The Fed Is ‘Chasing Its Own Tail’ On Inflation, And The Housing Market Is Paying The Price, Expert Says

A guest essay published in The New York Times on Tuesday finally pointed a finger at a major culprit behind the housing crisis: The Federal Reserve.

The essay was written by Westwood Capital Investment bank’s managing partner Daniel Alpert, and detailed his take on the Fed’s “relentless attack on inflation” which he thinks is jeopardizing the market. Alpert decries the Fed’s decision to raise key federal funds policy interest rate to a level 22 times what it had been in the year and a half prior.

In normal times, this type of action would make mortgages insanely expensive for homeowners and make homes a lot cheaper, which limits spending power. But Alpert rightly notes these aren’t normal times. As mortgage rates skyrocketed from around three percent to the near eight percent it is now, it caused a catastrophe for the housing market.

Homeowners with good interest rates don’t want to move. And new buyers don’t want to get locked into an overpriced home at a high interest rate. So we have “both a mobility and an inventory crisis,” as Alpert put it.

Housing has helped ensure the cost of just about everything has increased in 2023. “It is an irony that the Fed’s effort to tamp down inflation is causing an increase in core inflation measures,” Alpert notes. “And while the Fed is chasing its own tail, other avenues for controlling inflation have weakened considerably as a result of the unique circumstances surrounding the pandemic.”

The pandemic allowed for Americans to increase their savings rates. And many businesses were locked into cheap financing. So, what happens next?

Alpert thinks the Fed should declare victory and give up on its target of two percent. But the likelihood of that is low. Instead, Alpert wants the Fed to halt and then reverse policies related to mortgage securities and Quantitative Tightening. In layman’s terms, the Fed has to reduce the cost of mortgages or we’re doomed.

AUTHOR

KAY SMYTHE

News and commentary writer.

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Americans Are Increasingly Failing To Make Debt Payments As Inflation Continues To Put ‘Strain On Consumers’

Americans are increasingly falling behind on their debt payments as inflation continues to erode real incomes, threatening to cause many consumers to declare bankruptcy.

Delinquency transitions, debts that were previously being paid but no longer are despite outstanding obligations, rose rapidly in the third quarter of 2023 in all forms of debt except for student loans, according to the Federal Reserve Bank of New York. Poor U.S. economic conditions linked to rising inflation and interest rates have left Americans unable to pay for previous obligations that they once could afford, according to experts who spoke to the Daily Caller News Foundation.

“Consumers pay for things three ways: income, savings and credit,” Michael Faulkender, chief economist and senior advisor for the Center for American Prosperity, told the DCNF. “We know that wages have not kept up with inflation over the last 2.5 years and that many households have spent all of the savings accumulated during the pandemic. Therefore, in order to maintain their spending levels, they have been adding to their credit card balances, such that aggregate balances have now eclipsed $1 trillion. Rising credit card debt in a rising interest rate environment with incomes not keeping pace will put more and more households into financial difficulty, resulting in delinquencies.”

Delinquency transitions for credit cards and auto loans saw the biggest increase among debt forms in the third quarter, rising to 8% and 7.4%, respectively, according to the New York Fed. Credit card debt increased to $1.08 trillion in the quarter, rising 4.7% from the second quarter, when it exceeded $1 trillion for the first time in U.S. history.

Real wages for average Americans have declined since President Joe Biden took office, sinking 2.1% from the first quarter of 2021 to the third quarter of 2023, according to the Federal Reserve Bank of St. Louis. Americans are increasingly turning to their savings to make up the difference in lost wages, with Americans collectively holding $687.7 billion in savings as of September 2023, compared to more than $1 trillion in May and nearly $6 trillion in April 2020.

“It likely indicates that average Americans are not doing well financially,” Jai Kedia, a research fellow for the Center for Monetary and Financial Alternatives at the Cato Institute, told the DCNF. “The quarter-by-quarter increase in delinquencies is probably a signal that the economy is not as good as people thought earlier this year — rather that the hard landing many predicted last year but never came may simply have been delayed.”

An economic soft landing refers to a slowdown in market growth that avoids a recession, as opposed to a hard landing, which would result in a recession, slowing economic growth but also ultimately bringing inflation down. Following the September Federal Open Market Committee meeting, Jerome Powell, chair of the Fed, said a soft landing was not a baseline expectation for the Fed in its fight against inflation.

“The rise in delinquencies is indicative of increasing strain on consumers,” Peter Earle, an economist at the American Institute for Economic Research, told the DCNF. “Over the past three-and-a-half years, we’ve had widespread unemployment, an uneven recovery, and then both the highest inflation and the most aggressive rate-hiking campaign in four decades. Inflation is still substantially elevated. Unemployment is rising faster now, the economy is slowing under the strain of higher borrowing costs, and bills are going unpaid.”

Inflation peaked under Biden at 9.1% in June 2022 but has decelerated since despite remaining elevated, measuring at 3.7% in both August and September, far from the Fed’s 2% target. In response, the Fed has raised its federal funds rate to a range of 5.25% and 5.50%, the highest point in 22 years, over the course of 11 rate hikes starting in March 2022.

“People respond to incentives,” Kedia told the DCNF. “The government provided massive amounts of fiscal stimulus that was marketed as a one-time gift. People used this windfall to purchase goods and services — perhaps these included down payments on durable items that are now getting difficult to pay back loans on.”

The Biden administration has pushed a number of big government spending bills, including the American Rescue Plan signed in March 2021 that provided $1.9 trillion in stimulus checks, debt bailouts and more. The president also signed the Inflation Reduction Act, which approved $750 billion in new spending, a large amount going to climate initiatives.

“In September 2023, for the fourth month in a row, real spending outpaced real income growth,” Earle told the DCNF. “This suggests that a large and growing portion of recent US spending has been drawn from savings and financed by borrowing. Although wages and salaries increased in September 2023, disposable income declined for the third consecutive month, signaling that American consumers have been saving less to support current and future spending. Not only does this mean that they are living beyond their means, but they are tremendously vulnerable to an unanticipated economic shock.”

The White House did not respond to a request for comment from the DCNF.

AUTHOR

WILL KESSLER

Contributor.

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Job Gains Fall Short Of Explanations As Unemployment Ticks Up

The U.S. added 150,000 nonfarm payroll jobs in October as the unemployment rate ticked up to 3.9%, according to Bureau of Labor Statistics (BLS) data released Friday.

Economists had anticipated that the country would add 180,000 jobs in October compared to the 336,000 jobs that were added in September and that the unemployment rate would remain at 3.8%, according to Reuters. On Wednesday, at the conclusion of its Federal Open Market Committee meeting, the Federal Reserve announced that it would be keeping its federal funds rate steady in the range of 5.25% and 5.50%, a 22-year high, after a series of 11 rate hikes that started in March 2022 in an effort to tame inflation.

The healthcare sector reported the largest increase in jobs, adding 58,000 for the month of October, with the government following closely behind, adding 51,000 for the month, according to the BLS. Employment in manufacturing fell by 35,000 in October, reflecting strike activity in the sector, particularly from the United Auto Workers, who engaged in a partial strike against Ford, Stellantis and General Motors.

The number of jobs added in previous months was once again revised down, with August adding 165,000 jobs instead of 227,000 and September adding 297,000 jobs instead of 336,000, according to the BLS. The U.S. economy added 101,000 fewer jobs than previously thought due to these revisions.

The economy grew at a blistering pace in the third quarter of 2023, with Gross Domestic Product rising 4.9% year-over-year. The gain was driven by consumer and government spending, while average Americans drain their savings, boosting consumption.

Inflation remained elevated in September, rising 3.7% year-over-year, the same as in August, far from the Fed’s 2% target. Inflation has decelerated since its peak of 9.1% in June 2022.

“Last month’s jobs report was nowhere near as rosy as the headline numbers made it appear, as the hiring in September was essentially all part-time jobs and disproportionately public sector,” Antoni told the DCNF. “Also, real weekly earnings fell, both month-over-month and year-over-year. The broader economic outlook remains soft, with a recession likely in early 2024. Slower job growth, and then eventual job losses, will assist in determining precisely where we are on that timeline.”

While September’s job report showed higher-than-expected growth, the number of Americans employed in full-time jobs dropped by 22,000. In that same time period, the number of Americans employed in part-time positions increased by 151,000 as more Americans took part-time jobs and even second or third jobs to make ends meet.

AUTHOR

WILL KESSLER

Contributor.

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Inflation Stays Hot As High Prices Continue To Plague Americans

Inflation remained high in September, staying well above the Federal Reserve’s 2% target, according to the latest Bureau of Labor Statistics (BLS) release on Thursday.

The Consumer Price Index (CPI), a broad measure of the prices of everyday goods, increased 3.7% on an annual basis in September, compared to 3.7% in August, exceeding the expectation of 3.6%, according to the BLS. Core CPI, which excludes the volatile categories of energy and food, remained high, rising to 4.1% year-over-year in September, compared to 4.3% in August.

“The combination of high headline inflation and low core inflation is doubly bad for average Americans since the economy seems to be slowing but they are still paying higher prices for gas, one of their most important purchases,” Dr. Thomas Hogan, senior research faculty at the American Institute for Economic Research and former chief economist for the Senate Committee on Banking, Housing and Urban Affairs, told the DCNF. “Based on the Fed’s most recent economic projections, they expect to raise interest rates one more time this year. Financial markets are currently projecting them to keep rates steady in November and raise in December, but if inflation comes in higher than expected, it would make a November rate hike more likely.”

Shelter made up more than half of the increase in inflation for September, rising 7.2% year-over-year, while the rise in the price of gasoline was also a significant contributor, rising 2.1% for just the month and 3.0% for the year, according to the BLS. The index for food rose 3.7% for the year, with food away from home rising 6.0%.

Despite inflation persistently remaining above 3% over the last few months, the Fed chose not to raise its federal funds rate at the last Federal Open Market Committee (FOMC) meeting in September, keeping the rate at a range of 5.25% and 5.50%, and will announce whether or not rates will be hiked again at the conclusion of its next meeting on November 1. The rate has been hiked 11 times since March 2022 in an effort to bring down inflation that peaked at 9.1% in June 2022.

The U.S. economy unexpectedly added 336,000 nonfarm payroll jobs in September, far higher than the 170,000 that were expected, while unemployment remained at 3.8%. Despite the large addition, the gain was dominated by an increase of 151,000 Americans becoming employed in part-time jobs, while the number of people employed in full-time jobs dropped by 22,000.

“Some Americans are asking when prices will start coming down,” Hogan told the DCNF. “The short answer is: never. If inflation had been caused by supply bottlenecks, as Fed officials initially claimed, then we would see prices fall as the supply constraints went away. In reality, inflation was driven by the Fed’s bad monetary policy, which means prices will remain high and will only go higher.”

AUTHOR

WILL KESSLER

Contributor.

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‘Inflation Tax’ Is Higher Than Federal Income Tax

Americans are paying far more to offset the costs of inflation since President Joe Biden took office than they pay toward federal income taxes, according to data calculated by the Daily Caller News Foundation.

Average hourly earnings rose from $33.60 per hour in June to $33.74 per hour in July, but when adjusted for inflation since the beginning of Biden’s term as president in January 2021, real wages have failed to keep up, resulting in $4.62 less per hour when adjusted, according to data from the Bureau of Labor Statistics and calculated by E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget. At the average hourly rate for Americans of $33.60, workers pay $3.08 per hour in federal income taxes, far less than what inflation has cost the average worker, according to data calculated by the DCNF.

“Bidenomics can be defined by government spending, borrowing, and printing too much money,” Antoni told the DCNF. “That’s also the recipe for inflation, so the Biden administration’s policies are directly to blame for the inflation tax, a clear violation of Mr. Biden’s promise not to raise taxes on those making less than $400,000 a year.”

“But this is ultimately about policy, and not politics,” Antoni continued. “Plenty of congressional Republicans voted for excessive spending over the last three years and must share some of the blame for our current stagflation. Notwithstanding that fact, Biden is clearly the bigger sinner here, constantly pushing for more spending and driving the nation’s finances into the ground.”

Inflation rose to 3.2% year-over-year in July, up from 3.0% in June after steadily declining from a high of 9.1% in June 2022. The largest contributor to that increase was shelter, which rose 0.4% for the month of July, totaling 90% of the increase in inflation.

“The Federal Reserve, which plans and executes US monetary policy, is responsible for the destruction of real wages since 2020,” Peter Earle, economist at the American Institute for Economic Research, told the DCNF. “The Federal Reserve’s massively expansionary policies throughout 2020 had far-reaching consequences. The winnowing of the dollar’s purchasing power is being felt by every citizen, but hits the poor and individuals on a fixed income far worse than most others.”

The Federal Reserve hiked its federal funds rate for the eleventh time since March 2022 in July, bringing the target rate within a range of 5.25% and 5.50%, the highest rate since 2001. Following the rate hike at the Federal Open Market Committee meeting, Fed Chair Jerome Powell remarked that inflation will not return to the target rate of 2% until 2025.

“Inflation is fundamentally a tax because it is a transfer of wealth from you to the government,” Antoni told the DCNF. “You continue paying that inflation tax until your wages catch up to inflation. At that point, your cumulative lost purchasing power will be equal to how much the government implicitly confiscated from you through inflation.”

AUTHOR

WILL KESSLER

Contributor.

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Inflation Refuses To Go Away As Prices Stay High

Inflation refused to significantly ease despite the Federal Reserve’s efforts to rein in high prices, according to the latest Bureau of Labor Statistics (BLS) inflation report released on Wednesday.

The Consumer Price Index (CPI), a broad measure of the prices of everyday goods such as energy and food, increased 4.9% on an annual basis in April compared to 5% in March, according to the BLS. Core CPI — which excludes energy and food — remained high, rising 5.5% year-over-year in April, compared to 5.6% in March.

The increase was driven primarily by a rise in shelter costs, which jumped 0.4% in April compared to 0.6% in March, according to the BLS. Inflation grew 0.4% on a monthly basis in April, compared to 0.1% in March, according to the BLS.

The index for used cars and trucks increased 4.4% and the index for motor vehicle insurance rose 1.4%, according to the BLS. The indices for recreation, household furnishings and operations and personal care also increased.

The energy index decreased 5.1% over the 12 months ending in April while the food index increased 7.7% for the last year.

Inflation reached 9.1% in June 2022, its highest point since 1982, according to the BLS.

“The direction of inflation is getting less bad, but pace of improvement is still frustratingly slow,” Bill Adams, chief economist for Comerica Bank told Morningstar.

“Inflation has stayed higher for longer than the conventional forecasting techniques would lead us to believe, and so the risk is that the persistence of inflation continues,” he said. “That’s another way of saying that once inflation has picked up, it’s hard to slow down again. And that’s where we are now.”

The CPI report follows an unexpectedly hot jobs report on Friday as the U.S. added 253,000 jobs in April, and the unemployment rate dropped slightly to 3.4%, according to BLS data.

“We remain committed to bringing inflation back down to our 2% goal and to keep our longer-term inflation expectations well-anchored,” Federal Reserve Chair Jerome Powell, who has raised interest rates ten consecutive times in an attempt to lower inflation, said Wednesday in a press conference following the Federal Open Market Committee (FOMC) meeting. “Reducing inflation is likely to require a period of below-trend growth and some softening of labor market conditions.”

AUTHOR

JASON COHEN

Contributor.

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Prices Stay Sky-High In October As Inflation Continues To Run Hot

Inflation rose 0.4% on a monthly basis in October as the annual rate undercut expectations to come in at 7.7%, according to the Bureau of Labor Statistics (BLS).

Economists predicted that inflation would grow 0.6% on a monthly basis and 7.9% on an annual basis in October, according to a survey conducted by Bloomberg. Core inflation, which discounts the prices of food and energy due to their volatile nature, increased 0.3% on a monthly basis, but nudged down in October to 6.3% on an annual basis from September’s 40-year high of 6.6%, the BLS reported.

“A strong labor market and strong job growth supports strong demand, which allows inflationary pressures to stay elevated,” U.S. economist at T. Rowe Price, Blerina Uruci, told The Wall Street Journal. “You’ve got more demand chasing goods and services, the supply of which is being impaired at the moment for a number of reasons.”

Food prices were up 10.9% on an annual basis, continuing to moderate slightly from the 40-year highs set in August but still well above February’s 8.6%, which was a record at the time, and more than five times greater than the Federal Reserve’s target of 2% inflation for all items.

Investors took recent remarks from Jerome Powell as an indication that the Fed will likely stop raising interest rates at a higher level than previously anticipated, Yahoo Finance reported Sunday.

AUTHOR

JOHN HUGH DEMASTRI

Contributor.

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Unemployment Surges Above Expectations As The Number Of Jobless Americans Rises

The unemployment rate rose to 3.7% in October, up from expectations it would hold steady at 3.5%, as the number of jobless Americans rose to 6.1 million, the Bureau of Labor Statistics (BLS) reported Friday.

Labor force participation nudged down 0.1% from September to October, to 62.2%, according to the BLS. Despite employers adding 261,000 jobs overall in October, down from 315,000 in September, the number of unemployed people rose by 306,000, up to 6.1 million, the highest level since February, according to the Federal Reserve Bank of St. Louis.

The unemployment range has hovered between 3.5% to 3.7% since March, and labor force participation has hovered 1.2 percentage points below the pre-pandemic standard set in February 2020, the BLS reported. Monthly job growth has been slowing, with employers adding 372,000 jobs per month in the third quarter of 2022, down from 543,000 in the third quarter of 2021, according to The Wall Street Journal.

The number of additions blew past investors’ expectations of a more-modest gain of 205,000 jobs, and the unemployment rate surpassed predictions it would hold steady at 3.5%, the WSJ reported. The labor market is anticipated to slow as the Federal Reserve continues to hike interest rates in its bid to combat inflation.

“The broader picture is of an overheated labor market where demand substantially exceeds supply,” Federal Reserve Chair Jerome Powell said in a Wednesday press conference, according to the WSJ. “I don’t see the case for real softening just yet.”

The BLS data contradicts a Wednesday report from payroll firm ADP, which had estimated that the manufacturing sector had cut 20,000 jobs in October. In contrast, the BLS data finds that manufacturers added 32,000 jobs in October, slower than the 37,000 per month average in 2022, but faster than the 30,000 per month seen in 2021.

AUTHOR

JOHN HUGH DEMASTRI

Contributor.

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The Federal Reserve Hikes Interest Rates Again As Inflation Rages On

The Federal Reserve announced an interest rate hike of 0.75 percentage points, bumping the range of the federal interest rate to between 3.75% and 4% following a Wednesday meeting of Fed policymakers.

The rate hike matches investor expectations and is the fifth consecutive hike since March and the fourth at this aggressive pace since June as the Federal Reserve attempts to cool the economy and blunt persistently high inflation, The Wall Street Journal reported Tuesday. All eyes are now on the Fed’s December meeting, with investors debating whether the Fed will continue at its aggressive pace of 0.75 percentage point hikes or slow to 0.5 in a bid to ease the pressure on an economy an emerging consensus of analysts say is heading towards a recession.

Some investors were hoping the Fed would begin a “pivot” towards reduced rate hikes in December after various signs that the economy was beginning to slow, Reuters reported Tuesday. However, following a Bureau of Labor Statistics report Tuesday that showed an unexpectedly strong labor market, with job openings in September nearly recouping an August decline, some investors believe the Fed will likely see itself as having more work to do in prompting a slowdown.

“Despite other signs of economic deceleration,” Ronald Temple, head of U.S. equity at financial advisory firm Lazard Asset Management, told Reuters, “the job openings data taken together with nonfarm payroll growth indicate the Fed is far from the point where it can declare victory over inflation and lift its foot off the economic brake.”

So-called “core inflation,” which measures inflation less food and energy, ticked up to 5.1% year-on-year in September, according to the Fed’s preferred inflation metric, the Personal Consumption Expenditures (PCE) price index. The more well-known Consumer Price Index (CPI) has repeatedly come in hot, with its most recent reading also showing soaring core inflation, up 0.6% on a monthly basis in September and up 6.6% on an annual basis.

Heightened rates have pushed people away from buying houses at the fastest rates on record, as 30-year fixed mortgage rates hit their highest levels in 20 years. Elevated interest rates are also putting pressure on the federal government, with the cost of interest on the $31.1 trillion national debt set to surpass the $750 billion spent on defense this fiscal year by 2026, according to CNN.

AUTHOR

JOHN HUGH DEMASTRI

Contributor.

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