Over the past few months, the Biden administration has provided assurances to Americans that escalating inflation will not become a problem. He has also insisted that multiple multi-trillion dollar federal spending packages will not severely impact inflation, though economists and Republicans have long expressed doubts about these claims.
Biden was eventually forced to admit that inflation was a problem, given its blatant increase, though he still refused to acknowledge the seriousness by claiming that inflation is only “transitory,” which continued to raise economists’ eyebrows.
However, in light of the recent commentary from a Harvard economist, it appears that Biden very well may have to adjust his official excuse once again.
During a recent appearance on CNN, Jason Furman, the Harvard economist noted that any increases in wages brought abut by COVID relief packages have been utterly decimated by skyrocketing inflation, which has transpired ever since Biden took over the White House.
The CNN Report detailed how small and large companies have increased wages in order to encourage more employees to return to work; however, these higher wages offer little incentive due to enormous inflation.
Relatively speaking, compensation has dipped to levels lower than December 2019.
In addition, the Employment Cost Index, which pertains to wages and salaries, dropped in the last quarter and is presently sitting on levels that are 2 percent below pre-pandemic salaries, when accounting for inflation.
Furman wryly observed that “the hot economy is heating prices more than it is heating wages.”
In addition, the CNN Report noted that “prices are soaring” and “food is more expensive.” In addition, gasoline prices are surging and prices for cars have hit “record levels.”
Worst of all, the Consumer Price Index has escalated 5.4 percent in 2021, with a 0.9 percent in June alone, which constitute “the largest jumps for each since mid-2008.”
Inflation wiped out America's pay raises | CNN https://t.co/3tByF7n9Tw
— Kristin B. Tate (@KristinBTate) August 10, 2021
The situation does not appear to be any better in the near-future either, according to an op-ed in the Labor Department’s economic report for the month of July. In general, the Wall Street Journal editorial board has observed that inflation may be here for quite some time.
The editorial board was also amused by Biden’s claim that inflation was “transitory,” adding, “When does transitory, in the Federal Reserve’s inflation lingo, become persistent?”
GOP legislators have long argued that artificial federal stimulus spending through varied packages will have a negative effect on the economy.
Specifically, the intervention would result in massive market demand, coupled with labor shortages that limit the amount of supply.
In a nutshell, both of these factors result in escalating inflation.