It’s the Economy Stupid: Understanding the Inflation in 2022
Famous political strategist James Carville once said it's the economy stupid. Since then this slogan has typified the effect it has in politics. One challenge that many presidents face over time is the economy. Their ability to pull levers and make things happen is mainly perceptual to a certain degree. Absent some extraordinary intervention that's planned that usually has to be governed by new legislation because existing law only gives the President so much to help balance the economy more favorably. Furthermore, as we've seen constantly, the existing levers are more geared towards helping those at the higher rungs of the economic ladder. Unrigging the system is a challenge. The new legislation would be required to give them the authority to balance the economy back towards a better place for all Americans. They are working to help the middle class and those living in poverty. All that being said, it is a meaningful conversation to have about the role of the president in shaping the economy and the role President Biden particularly has on the current issue of inflation.
One does not need to go far to see and notice that prices have gone up, and in certain areas, this continual rise in price is matched by the weirdness of the United States systems and the inequality bent within it. For instance, business owners could pay their executives slightly less rather than pass off some increased costs of doing work to the consumer, especially at the highest levels in large corporations. They could decide to absorb some of those costs in their executive and C-Suite level pay period they choose not to. But here's what we do know
According to the latest consumer price index1 numbers, prices in November were up 6.9 percent compared with a year ago, the highest increase since 1982. The problem is that the solution — economic and political — isn’t as simple as raising interest rates to bring down inflation: There’s a cost to keeping inflation rates low, and we’ve often been too quick to pump the brakes on a recovering economy. Covid-19 has warped global supply and demand patterns in ways the system never anticipated. This situation caused a rise in prices as greater demand than the system could supply. The steps Biden is taking now could have a limited effect but won't be felt for some time.
Disruptions in the global supply chain due to labor shortages, Covid-19 restrictions, and an increased demand for goods (as opposed to services) have caused the prices of some products to increase.
The most visible steps Biden has taken so far to bring those prices down are to try unclogging bottlenecks at US ports, where container ships are waiting to unload. He announced last year that two of the largest US ports -- Los Angeles and Long Beach -- would operate 24 hours a day. And Biden announced in Baltimore in November new funding for expanding port capacity across the country.
Once goods get offloaded, however, there is a shortage of truck drivers to transport them around the country. The administration weighs steps like lowering the minimum age for truck drivers or increasing their pay to attract more drivers. And officials have not ruled out using the National Guard to step in and begin trucking goods.
Administration officials acknowledge that, even with these steps, any resulting decrease in prices will take time to materialize.
"There is no quick fix. If there were a light switch, we would do that," Commerce Secretary Gina Raimondo said on CNN. "We all have to be just a little bit patient because we are seeing that the action we are taking is working. We just have to stick with it, you know, long enough to solve the problem."
Unfortunately, it is not a quick fix to rewire and redo complex supply chains around a system that opens and closes on the whim of a virus. However, some excellent stories cover this topic that can dive into what's happening, what's going on, and what you need to know so forth further reading; please check out the following sources:
Biden on inflation report: 'Reversing this trend is a top priority for me.'
Inflation is surging. Joe Biden is still optimistic.