For months, the Biden Admin. promised Americans that increasing inflation is “not an issue” to fear during the recovery from the covid-19 recession. Combining multitrillion-dollar spending bills with the economy would not cause significant inflationary affects, the administration said, even as economists and GOP lawmakers questioned these statements.
Later, when forced to accept the fact that inflation is in fact rising, the White House pivoted to claiming that the increase was only “transitory,” and even preferable. Mainstream news agreed and shared the message. Economists again replied with raised eyebrows.
But the White House’s explanation might need to be changed again.
A Harvard economist has informed CNN that wage gains brought by covid-19 relief packages have been completely wiped away by soaring inflation in the months after Biden entered the White House. Here’s how CNN framed it:
“Compensation is now less than it was in Dec. 2019, when adjusted to account for inflation, according to an analysis done by Jason Furman, a Harvard economics professor.”
“The Employment Cost Index — which tracks wages, along with retirement, health, and other benefits — went down in the last quarter and is 2% under its pre-pandemic norm, when inflation is taken into account.”
“The hot economy is increasing prices more than it is increasing wages,” said Furman.
“Prices are soaring. Gas costs more. Food is getting more expensive. Car prices are also at record highs. The CPI rose 0.9% in June and 5.4% over the previous 12 months — the largest increases for each since the middle of 2008, according to official data,” the CNN report said.
Inflation wiped out America's pay raises | CNN https://t.co/3tByF7n9Tw
— Kristin B. Tate (@KristinBTate) August 10, 2021
Things do not seem to be getting any better, either. In an op-ed replying to the Labor Dept.’s July economic report, the WSJ editorial board even said that inflation might be here to stay.
GOP lawmakers have said for months that injecting money into the economy through relief bills and relief packages would cause doom for America’s recovery. The intervention would cause a rising market demand and labor shortages would restrict supply, they said. The result is increasing inflation.
Author: Blake Ambrose