Biden, Economy & Business, Government, Politics

Biden’s Rosy Picture Crumbles: More Troubling Economic News Surfaces

July brought yet another surge in inflation, casting doubt on claims that the inflationary pressures were fleeting and validating Federal Reserve Chairman Jerome Powell’s recent assertion that additional interest rate hikes are imperative. The latest release of the Personal Consumption Expenditures (PCE) price index for July reaffirmed these concerns, with figures aligning with elevated expectations compared to previous readings.

The headline PCE inflation escalated by 3.3 percent on a year-over-year basis, while Core PCE inflation, excluding volatile food and energy prices, spiked by 4.2 percent over the past year. These numbers underscore the persistent trend of price hikes in the wrong, more costly direction. This contradiction in the face of escalating costs further dismantles President Joe Biden’s optimistic proclamations that inflation is receding.

A closer look at the data provided by the Bureau of Economic Analysis for July reveals that the PCE price index grew by 0.2 percent from the preceding month. Although goods prices fell by 0.3 percent, service prices surged by 0.4 percent. Food prices, up by 0.2 percent, and energy prices, up by 0.1 percent, contributed to this upward trajectory. Excluding food and energy, the PCE price index still rose by 0.2 percent. Moreover, the PCE price index exhibited a substantial 3.3 percent increase from the same month a year ago.

Since the PCE price index serves as the Federal Reserve’s preferred measure of inflation, the ongoing upward movement, coupled with the fact that prices have surged over 16 percent since Biden’s inauguration, heightens the likelihood of further interest rate hikes by the Federal Open Market Committee (FOMC). These rate hikes have already soared to levels not witnessed since the 2008 financial crisis, impacting the housing market and creating obstacles for buyers, sellers, and new homeowners alike.

Job Creators Network President and CEO Alfredo Ortiz expressed concern over the accelerating inflation. “Rising inflation is reducing American living standards and making it more difficult for ordinary small businesses to remain profitable,” he noted. The PCE, being the Federal Reserve’s favored gauge of inflation, remains over 50 percent higher than the Fed’s target rate of 2.0 percent. This persistent acceleration in inflation heightens the likelihood of further interest rate hikes, contributing to the credit crisis faced by small businesses. The combination of rampant prices and higher borrowing costs due to what Ortiz terms “Bidenflation” presents a formidable challenge for both small businesses and everyday Americans.

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