President Joe Biden announced a decrease in the inflation rate for July to 2.9%, a slight decline from June’s 3%.
He emphasized that while progress is being made, prices remain high and further action is needed to reduce costs for Americans.
“Folks, inflation has fallen below 3%, its lowest level since March 2021. Prices are still too high, and we have more work to do to lower costs for hardworking Americans — but we’re making real progress, with wages rising faster than prices for 17 months in a row,” Biden wrote on X.
Critics pointed to the $1.9 trillion American Rescue Plan (ARP), enacted under Biden, as a key factor in rising inflation, with warnings from economists like former Treasury Secretary Larry Summers about its inflationary impact.
“We worried that shoveling an unprecedented amount of spending into an economy already on the road to recovery would mean too much money chasing too few goods,” former Obama administration Treasury Department official Steven Rattner said.
Observers argue that the increased spending in an already recovering economy led to an imbalance of too much cash chasing too few goods, fueling inflation.
“The tax hikes and the environmental restrictions [under Biden] are suppressing the supply side of the economy — not enough goods. And the spending increases the demand side of the economy — too much cash,” former economic adviser Larry Kudlow said.
“If you are going to spend more than you can produce, well, prices have to go up. And the obvious solution is to spend less and produce more.”
Furthermore, Biden’s economic policies are said to have raised price levels by about 20% since he took office, and concerns remain about potential future inflation spikes if Democrats pursue further extensive spending.
