Inflation messes with Joe Biden's presidency

Welcome to the Journal editorial report. I’m Paul. As you go, third straight month of rising inflation is putting the Biden administration on defense and raising questions about whether the Federal Reserve will cut interest rates at all in 2024. Consumer prices rose faster than expected in March, up 3.5% from a year ago, while core inflation minus volatile food and energy prices rose 3.8%. Addressing reporters on Wednesday, President Biden defended his economic record and said he still thinks there will be a rate cut this year. Do stand by my prediction that before the year is out to be a rate cut, this may delay at a month or so. I’m not sure of that. I don’t. We don’t know what the Fed is going to do for certain, but look, we have dramatically reduced inflation from 9% down to close to 3%. We’re in a situation where we’re better situation than we were when we took office, where we inflation was skyrocketing and we have a plan to deal with it. Let’s bring in our panel, Wall Street Journal columnist Dan Henninger, Kim Strassel and Bill Agurn. So, Dan, how serious is this little mini burst of of inflation now three months in a row? Oh, I would say it’s pretty serious. It’s very serious politically and economically as well. Isn’t it a great time to be a Wall Street trader or economist? What have we gone from this year? From predicting 7 rate cuts in 2024 to maybe two rate cuts or maybe not? Or Larry Summers suggesting maybe they’ll have to increase rates? So why shouldn’t the president himself, our great presidential economist, jump into the fray and predict that there’ll be one this year but later? But make no mistake, the president is putting pressure on Fed Chairman Powell. Really. You think he’s doing that? Yeah, I think so. I think he’s. I mean the he really needs a rate cut and Powell is the man on the spot with all this. He’s the one and the Fed people around him have to make a decision about what they’re going to do. And I think Powell understands that Like back in the 1970s, Arthur Burns who was Fed chairman then let didn’t get inflation under control. Paul Volcker had to come in precipitate A recession by raising rates high enough to get inflation under control. And Powell wants to be remembered as the guy who fixed the mess, not the one who left it to someone else to fix. Politically, Bill, the One of the big factors here is real wages. That is, wages after inflation. And when you look at the totality of the Biden administration from the start in January 21, 2021 to now, real wages, average hourly earnings have fallen 2 1/2%. So that’s something that people feel. Yet people know that. I mean every time I hear Joe Biden say we brought down for 9%, I’m reminded of this Honeymoons as episode where Jackie Gleeson says to Art Carney who visited you in hospital when he got hit on the head but with the baseball bat and Art Carney said who hit me on the head with the baseball bat. People know. People feel and they know that is Biden do it. And I think his problem is not so much the rate of inflation but the prices as you say they feel it in their paychecks. Yeah Kim is is this the biggest threat, inflation the biggest threat. I mean, other than the issue with the president age is, is inflation the single biggest threat in your view to his reelection? Yeah, I mean you look out at the polls and it remains the number one issue and in particular it remains the number one issue in those swing states where that’s going to decide the election. I think the problem for the president as well too is that nobody believes it kind of as Bill was alluding to, he just told a big whopper there. I I just have to correct it. By the way, he’s like the 9% inflation that we inherited. No, it was 1.4% when he took office and the inflation came as a result of their extraordinary spending policies and a slow fed to not get off the mark and deal with this a little bit quick, more quickly. And that’s the other problem, too, is people hear the President and continuing to call for the same more spending, more problems. So on the one hand, he’s telling the Fed, hey, you fix this, but he’s doing nothing on his end to make it better either. Yeah, Dan, the president’s response in his statement this week was to say that, well, the problem are businesses because they’re raising prices and they shouldn’t because they’re greedy and they want to make more money, profits. And then he’s also blaming Republicans because they are proposing to cut taxes. Either of those plausible as excuses? No, they’re not plausible at all. And I think it’s typical, you know, of a president and one under pressure, like Joe Biden to try to shift the blame. I think his problem is really deeper than that, Paul. We talk about inflation. Inflation in a way. The word inflation has become a proxy for what I think is a deeper, more sour mood in the population, especially among younger voters who he’s really desperately trying to hold on to. They just feel like their prospects aren’t that good now there’s a housing shortage, it’s expensive for them to live. And people say the direction of the country is strikingly, despite the fact the economy is going pretty well, people over 60% think the country’s going in the wrong direction. And I think that is something Joe Biden is going to have a very, very hard time overcoming, especially if prices for things like groceries and fuels run below this sour mood staying relatively high. The housing point is interesting, Bill, because if you’re a young person and you came of age with 0 interest rates, you were used to really low mortgage rates and you could say, OK, I might be able to afford a home now, you know, with 7% mortgages or whatever it is depending on your part of the country, it’s just out of reach for a lot of people. So the the the administration really needs a rate cut. They do, and there’s no way around it. I think also that news is the people Dan’s talking about, they’ve heard inflation’s not real. Oh, it’s temporary. They feel gaslighted that people are always telling them it’s better you have nothing to worry about and they don’t feel that in their lives.