Biden Says Economy Will ‘Continue To Make Progress’ After Another Dismal Inflation Report | JP
President Joe Biden expressed a strong degree of economic confidence even as the Consumer Price Index rose 6.0% between February 2022 and February 2023 and price pressures from household staples continued to worsen.
The month-to-month increase of 0.4% matched analysts’ forecasts, while core inflation, which factors out the more volatile food and energy categories, rose 0.5%. Food prices increased 0.4% and shelter prices increased 0.8% even as energy prices declined 0.6%, according to a Bureau of Labor Statistics report.
“The latest snapshot of inflation at the retail level has come in largely as expected and that alone is somewhat reassuring,” Bankrate Senior Economic Analyst Mark Hamrick said in comments provided to JP.
Despite the relative decline from the 6.4% inflation charted in January 2023, food and electricity prices have increased 9.5% and 12.9%, respectively, between February 2022 and February 2023. Biden said that “annual inflation is down by a third from this summer” in a Tuesday statement from the White House, even though inflation is more than three times higher than the 1.4% level observed when he entered office in January 2021.
“We will continue to make progress in our fight to build an economy from the bottom up and middle out, not top down,” the commander-in-chief said. “At the same time, I will do everything in my power to prevent us from going backwards on the progress we’ve made, including by standing up to Congressional Republicans who threaten economic catastrophe over the debt limit in order to secure tax cuts for the wealthy and large corporations and reckless cuts to critical programs that American seniors and families count on.”
Meanwhile, policymakers at the Federal Reserve have increased target federal funds rates to combat inflationary pressures. The collective 4.5% rise in interest rates over the past several months has shocked the financial sector: Silicon Valley Bank was forced to sell long-term government securities and corporate bonds at a loss to fund withdrawals due to the higher rates, leading to the company’s sudden implosion.
Biden added that the “challenges in the banking sector” are a reminder that “there will be setbacks along the way in our transition to steady and stable growth.”
The collapse of Silicon Valley Bank, which is now under the control of the Federal Deposit Insurance Corporation such that depositors can receive access to their funds, marks a new complication in efforts to combat inflation. Federal Reserve Chair Jerome Powell had told lawmakers mere days before the collapse that monetary policymakers intended to continue raising the target federal funds rate.
“Watching inflation as well as other recent developments, the Federal Reserve has a needle to thread,” Hamrick continued. “Consistent with its mandate for stable prices, it still needs to see inflation fall further while also ensuring the stability of the financial system. The bank failures of the past week have pushed financial stability issues to center stage, but inflation remains in the spotlight and is part of its dual mandate along with maximum employment.”
Powell joined Treasury Secretary Janet Yellen and FDIC Chairman Martin Gruenberg in a joint statement vowing that the banking system “remains resilient and on a solid foundation.” The officials promised that “no losses” associated with the collapse of Silicon Valley Bank would be “borne by the taxpayer.”