A gallon of regular gasoline that cost over $5 in June now goes for about $3.80. So let’s all thank Joe Biden for the lower gas prices.
Little to do with Biden, you say? You may be right. But if you blamed him for higher prices back then, why not give him credit now?
The answer may be that Republicans have done a pretty good job making the public think that Biden and the Democrats are at fault for inflation. And a sophisticated analysis that would counter this impression can be hard to digest. We’re in a world where anecdotes rule.
Here’s the real story: Inflation is a worldwide concern, and the problem is bigger elsewhere. As of September, the inflation rate was 10.9% in the European Union and over 13% in the United Kingdom. It was 8.2% in the United States – and slightly down from the month before. Go ahead and congratulate Biden, if you think national leaders are responsible.
There’s this myth that Republicans are good for the economy because they’re better at controlling deficits. History suggests the opposite. “The federal budget shortfall shrank by half to roughly $1.4 trillion in fiscal 2022,” says The Wall Street Journal. To which I’ll add “under Biden.”
In the first two years of Donald Trump – before COVID hit and made things far worse – the national debt grew by $3.25 trillion. Bear in mind that Republicans controlled both houses of Congress most of that time so you couldn’t blame Democrats for the poorly controlled spending – and certainly not the deficit-exploding [rich people’s] tax cut.
There’s a lot of worried talk about a possible recession as the Federal Reserve hikes interest rates to combat inflation. Let’s set politics aside for a moment and take a sober look at the current economic picture.
Most economists say that the risk of recession has risen but it hasn’t happened yet and may not happen. Mark Zandi, chief economist for Moody’s, thinks the odds of a recession next year are “close to even.”
And if a recession is so uncertain, one can expect that it would be mild if it arrives. Unemployment is at a 50-year low, and there remains a labor shortage. A modest rise in the unemployment rate could provide needed workers without creating widespread misery.
While inflation may be pinching the household budgets of lower-income people, many Americans are still out there spending big on non-essentials. American Airlines is among the carriers reporting higher revenues as demand for domestic flights takes off. The strong dollar, meanwhile, has made foreign travel cheaper.
[For what it’s worth, luxury retailers say demand is really strong for their wares, things like those $10,000 Hermes handbags. American shoppers in Paris are their big hope.]
Why? Many consumers still have money they didn’t spend during the COVID pandemic – including the stimulus checks. And pay raises have filed some of the edge off inflation.
Prices don’t march in an orderly formation. Food is costing more, but gasoline is costing less. Rising mortgage costs and a resulting softer real estate market mean lower home prices. And that has also resulted in better deals for furniture and appliances. [Their prices went through the roof during the housing binge.]
Many Wall Street economists are now betting that U.S. inflation “will slow substantially” over the next year, according to Bloomberg News.
No one is saying that the economy is swell or denying that the economic trends hurt some more than others. It’s only to note that contrary to the common impression, Democrats traditionally oversee stronger economies than Republicans do. Just look at the numbers.
