In his first State of the Union address, President Biden addressed the elephant in the room: Fixing inflation through more government spending.
He said that he had a better plan to combat inflation, lower your wages, produce more automobiles and semiconductors in America, and more infrastructure and innovation in Americab …,”. This was in reference to his Build Back Better plan which calls for spending at least $2 trillion.
Although economists may debunk Biden’s plan to fix inflation in some cases, most Americans need relief as soon as possible. Just hours before Biden’s speech, U.S. crude oil reached $106 per barrel. This was in addition to the already high fuel prices that are a major reason why inflation is at an all-time high. Energy prices are rising due to the conflict between Russia and Ukraine.
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The U.S. consumer prices jumped 7.5% in January, which is the largest increase since 1982. However, prices at the producer level rose 9.7%, which is the highest price ever.
American families spend on average $385 more per month for almost everything. But for some things, the costs can be even higher.
Lee and his team, which included Jackie Benson, discovered that households in Utah and the Mountain West region face inflation rates of about 9%. This adds an additional $511 per month to their monthly costs. The Pacific has $412 higher costs, while the West North, East North Central, and New England are experiencing costs that exceed $300.
Regional Inflation – Households Paying more Monthly
Mountain +9% or $511
Pacific: +7.3% $412
West North Central: +7.9% 396
East North Central: +7.9% 391
New England +6.6% 377
East South Central: +6.9% 331
“We also see President Biden double down on the same things which have failed. Lee responded to the State of the Union by tweeting, “Doubling down on the need for more Federal spending has caused inflation to skyrocket.”
The JEC report is in line with the views of economists from the National Association of Business Economics, who last week in a survey, warned that inflation will not go away soon.
They see a risk that inflation will continue to rise faster than they had expected in the next three years, largely because of the labor market. “Rising wages are cited by more than two-thirds of respondents to the survey,” David Altig (president of the National Association of Business Economics, executive vice president, and director of research at Federal Reserve Bank of Atlanta) said Monday.
All of these factors are making it difficult for Federal Reserve Chairman Jerome Powell to do his job. He is currently waiting to be reaffirmed. He’ll present his Semiannual Monetary Strategy Report to Congress on Wednesday and Thursday. It’s probable that he will be challenged to find solutions to rising prices after policymakers acknowledged that inflation was “transitory” in December.