WASHINGTON — President Joe Biden has a growing case to make that he helped solve inflation — if he can get voters to believe him.
The figures released last week reflect a historic level of progress in the fight against high prices, suggesting that inflation could approach the Federal Reserve’s 2% target around the November election. The consumer price index recorded an annual increase of 3.4%, but prices charged by producers of goods and services rose a paltry 1% last year.
Current and former aides say Biden is eager to do more to reduce inflation after a price surge in 2021 and 2022 crushed his public approval ratings in a way that is dragging down his reelection efforts. They see reasons for optimism in improving consumer confidence.
“It’s an ongoing effort,” White House Chief of Staff Jeff Zients said. “Under his leadership, we have attacked inflation from every angle.”
The question is whether voters will feel the improvement and reward Biden. Or will they punish him because inflation became a problem on his watch as the US emerged from pandemic shutdowns? The answer might depend on how people think about the costs of necessities like gasoline and eggs.
According to the Bureau of Labor Statistics, Biden can say with certainty that his policies have helped lower the average price of a dozen eggs to $2.51. That’s down from a peak last year of $4.82. But Republicans may counter that a dozen eggs cost $1.47 before Biden became president.
Leading GOP lawmakers like Rep. Jason Smith of Missouri, chairman of the House Ways and Means Committee, hailed the latest inflation numbers as evidence that voters are still suffering from high prices: “President Biden’s inflation crisis continues to rob the pockets of working families,” he said.
Former President Donald Trump has told his supporters that inflation under Biden is how “countries die” and that Trump’s return to the White House would mean lower energy costs.
“Drill, baby, drill,” Trump said in a video on social media. “We are going to significantly reduce electricity prices. We are going to lower your energy prices. Gasoline will go back to $2, and maybe even less than that.
Federal data shows that the average gas price fell below $2 per gallon during Trump’s presidency. But that was in early 2020, during the coronavirus pandemic, when schools and businesses were closed, sending the U.S. economy into shock as millions lost their jobs. A historic wave of federal government borrowing kept the U.S. economy stable during the deadly pandemic.
In 2021, Biden inherited an economy trapped in uncertainty about the course of the pandemic. He signed a $1.9 trillion relief package, an amount that Republicans and some economists say has put upward pressure on inflation, with the consumer price index hitting a four-decade high of 9.1% in June 2022.
Officials from the former and current Biden administration say the drop in inflation since then was the result of a series of choices. Biden gave the Federal Reserve the political space to raise interest rates. He supported supply chains and helped stabilize gas prices. At the same time, the historic burst of job growth under Biden has continued. Outside economists said this would be impossible if inflation fell.
Starting with Biden himself, the White House rejected the conventional wisdom that millions of workers would have to lose their jobs to cool demand and ease inflation.
“The president was really focused on using every tool we had to bring down prices without targeting the labor market,” said Bharat Ramamurti, former deputy director of the White House National Economic Council.
Some aides said the job growth has helped fill gaps in an economy recovering from coronavirus-related shutdowns. The unemployment rate is at a healthy 3.7% and the economy has added about 5 million more jobs so far under Biden’s watch than what the Congressional Budget Office projected before his policies took effect. Those policies include the bipartisan infrastructure bill and spending to increase computer chip production and shift the economy away from fossil fuels, as well as reduced insulin prices for people on Medicare.
Biden and many of his aides initially saw inflation as a result of pressure on global supply chains. Factories around the world were still struggling to fully reopen. Shipping container costs have increased tenfold. There were long delays in docking at major US ports. Much of the public saw inflation through the lens of their supermarkets, malls and gas stations, but the White House viewed it as a global problem.
“We showed him international graphs that this was happening worldwide and that countries with very different fiscal policies were experiencing different increases in inflation,” said Jared Bernstein, an aide who now chairs the White House Council of Economic Advisers.
Biden embraced a strategy to improve supply chains by working with the private sector. The ports of Los Angeles and Long Beach, California, began operating nonstop to clear the backlog of ships. The administration helped states reduce barriers for people trying to obtain a commercial driver’s license and become truck drivers.
But the president missed the point when he argued in July 2021 that inflation would be “temporary.” Inflation felt much more sustainable as it accelerated nearly a year after Biden’s statement.
According to a November White House analysis, 80% of the decline in inflation since 2022 was due in some form to improved supply chains. Inflation also slowed as the pace of hiring slowed as the recovery took place. The main driver of inflation in Thursday’s consumer price index was housing costs, a figure that experts say should fall in the coming months and further reduce inflation.
Still, the supply chain wasn’t the entire problem for Biden. After Russia invaded Ukraine in early 2022, food and energy prices rose as the market saw the risks of shortages caused by the war.
Biden responded in part by releasing a historic 180 million barrels of oil from US strategic reserves.
Some analysts and Republicans downplayed the release as a band-aid for a larger problem, but the White House argued that the daily release of 1 million barrels over the next six months would provide a bridge until U.S. oil production could increase.
Since it was announced in March 2022, average daily oil production in the US has increased by 1.44 million barrels. The country pumped a record average of 13.25 million barrels per day in October.
Republican lawmakers often criticize Biden for not being friendlier to oil drilling. But the data suggests that the US market has responded to the initial appeal of high prices by increasing production to limit future inflation risks, despite the turmoil surrounding the war between Israel and Hamas and the recent Houthi attacks on ships in the Red Sea.
Still, the Biden administration has made support for renewable energy one of its priorities to tackle climate change. As a result, officials don’t talk much about record domestic oil production.
Ben Harris, a former assistant secretary at the Treasury Department, said the declassification and a price ceiling on Russian oil ensured there was “no 1970s-style oil shock.”
But voters are far from reassured.
As many as 65% of American adults disapproved of Biden’s handling of the economy late last year, according to a survey by The Associated Press-NORC Center for Public Affairs.
By contrast, in March 2021, when pandemic relief became law and inflation was just 2.6%, 60% of adults said they approved of Biden’s economic leadership.