The U.S. has been experiencing high inflation rates for a series of years, which has caused much discomfort and problems for both citizens and the government.
Therefore, many people have been pointing fingers at either the current president of the country or Donald Trump, the immediate former president. However, experts believe that none are largely to blame for the high inflation.
Inflation Reduces
In June, the U.S. saw a further decrease in the inflation rate after it went down earlier in May. According to a report by the Bureau of Labor Statistics (BLS), the consumer price index rose 3% in June 2024 from June 2023, down from a 3.3% annual inflation rate in May.
This is bringing a much-needed sense of relief to Americans’ pockets, and they are glad for it. However, many have wondered why the inflation rate rose to 9% in the past few years.
The Presidential Debate
During the first U.S. presidential debate on June 27th, the two candidates, President Joe Biden and former President Donald Trump, went back and forth, blaming each other for the current level of inflation in the country.
Trump claimed that he gave Biden a “country with no, essentially no inflation,” and Biden caused the inflation. However, Biden said that Trump caused the inflation because “he decimated the economy, absolutely decimated the economy,” passing it on when it was “flat on its back.”
Economists Weigh In
However, economists have a different perspective. They believe neither Biden nor Trump is completely responsible for the country’s high inflation rates.
David Wessel, a left-leaning economist and director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, said, “I don’t think it’s a simple yes/no kind of answer. Presidents generally get more credit and blame for the economy than they deserve.”
ALSO READ: Inflation in the U.S. Falls by 0.1% With a Similar CPI Drop
More Points From an Economist
Mark Zandi, the chief economist at Moody’s Analytics, also said something similar, agreeing that neither president is fully to blame for the high inflation in the U.S. “In my view, neither Trump nor Biden is to blame for the high inflation,” he said.
Instead, he throws the blame on the war between Russia and Ukraine and the COVID-19 pandemic. “The blame goes to the pandemic and the Russian war in Ukraine,” he said.
Why Did It Truly Increase?
If both presidents were not entirely to blame, why did the inflation rate increase so high in the past few years? Fingers are pointing in different directions, but this only proves that there are many reasons why the inflation rate went up to 9%, which many people are unaware of.
Some of these factors are beyond Trump and Biden’s control and are the major causes of the constant rise in inflation over the past few years.
Federal Reserves Acted Late
The Federal Reserve is a notable reason for the high inflation rate. The country’s federal reserves act independently of the White House and have full authority over their actions. However, their officials did not respond to the quick spike in inflation in time.
Their slow response allowed the inflation rate to rise quickly without any restrictions. Since the high spike was noted in early 2021, when Biden took office, he could not have caused such a high rise.
The Pandemic Disrupted Global Supply Chains
Economists, analysts, and researchers have often cited the COVID-19 pandemic as one major cause of inflation. When it hit, it changed many things globally, and many countries are still reeling from its aftereffects.
It highly disrupted global supply chains, as the illness caused many labor shortages by sidelining workers. Immigration decreased, further reducing worker supply. Shipping and supply patterns were also affected, which greatly increased inflation.
Consumers Changed Their Buying Patterns
Consumers changed their buying patterns during the pandemic because the supply of products and services was reduced. They spent more time indoors and bought physical items rather than services. As they spent more time indoors than out, sales of furniture, cooking equipment, and comfort items increased.
This big shift affected the economy because Americans were used to spending money on outdoor activities like traveling, skating, dining out, and attending concerts and movie showings.
Russia’s War in Ukraine
Russia’s war with Ukraine has also been cited as a major reason for the inflation in the country. This is because as Covid cases skyrocketed in 2022, the supply chains in the country got more affected, and then the war “supercharged” the inflation, causing it to go even higher.
Zandi said that the war caused a further scarcity of commodities like food and oil worldwide and raised inflation rates globally.
ALSO READ: Shop These New Dollar Tree Items at Unbelievable Prices!
Global Trends
In an email, Stephen Brown, the deputy chief North American economist at Capital Economics, wrote that the country’s inflation is simply part of a global trend.
“We only have to look at the still high inflation rates in most other advanced economies to see that most of this inflation period was really about global trends … rather than about the specific policy actions of any given government (though they did play some role),” he said.
Biden and Trump Aren’t Entirely Without Fault
However, it is essential to note that both Biden and Trump are not entirely blameless in this matter. Michael Strain, the director of economic policy studies at the American Enterprise Institute and a right-leaning individual, said, “I do think President Biden bears some responsibility for the inflation that we’ve been living through for the past few years.”
Both are responsible for some decisions and reforms that also affected or aided inflation rates over the years, and he believes that more could have been done to reduce them.
“Greedflation”
Many have termed the pandemic relief policies that Biden and Trump also implemented “Greedflation,” which is said to be another factor in the country’s high inflation rate.
Economists believe that the central bank and Federal reserves did not act until about a year after the inflation started. This did not help the policies that also were supposed to reduce inflation. Therefore, inflation results from many factors that are not entirely Trump’s or Biden’s fault.
You Might Also Like:
U.S. Economy Adds Over 200,000 Jobs in June To Reduce Unemployment Rate Currently at 4.1%
‘Micro Weddings’ Are the New Trend as Couples Cannot Afford Inflated Wedding Prices
Experts Say That the “Right Mix” of Retirement Accounts Is More Affordable Long-Term
Western Clothing and Denim Are Back in Trend, and the Reason Will Shock You