By MJ Lee, Phil Mattingly and Maegan Vazquez, CNN
(CNN) — The White House attempted on Thursday to put a positive spin on another rough economic report, saying there are indicators of progress in the inflation figures – even as the Federal Reserve is expected to respond by aggressively raising interest rates again.
The September Consumer Price Index report, which measures changes in the prices of a list of consumer goods and services, released on Thursday showed that U.S. consumers continue to be hit by higher prices despite the Fed’s unprecedented interest rate hikes in recent months aimed at cooling the market.
Data from the Bureau of Labor Statistics showed annual inflation rose 8.2% in September, a slower rise than the 8.3% rise seen in August. Economists had forecast the pace of price increases to slow to 8.1% last month. On a month-to-month basis, overall consumer prices rose 0.4% from August.
While in California on Thursday, Biden acknowledged Americans are feeling the pain while pointing out that inflation over the past three months has averaged 2% — down from 11% in the previous quarter.
“That’s progress,” Biden said, later acknowledging that “Americans are being squeezed by the cost of living. That’s been true for years and people don’t have to read the report to tell them that they’re in a rush. Fighting this battle every day is one of the main reasons I ran for President of the United States.”
He also said the current struggles are a global phenomenon and are not driven by more Americans earning higher salaries.
Earlier Thursday, Biden received a briefing from his economics team and asked them to keep him updated on changing conditions. His economics team, according to a White House statement, “reported that the United States remains in a strong position to bring down inflation and maintain a resilient labor market,” and that the president’s economic plan positions the US economy “for stronger growth and investment”. .”
The attempt to find the silver lining in the new inflation figures highlights a current and urgent situation political problem for President Joe Biden and his administration: Addressing Americans’ economic fears and mitigating potential ramifications in next month’s midterm elections.
The stock market initially fell after the report – Dow futures fell more than 400 points, or 1.5%, after the report was released, S&P 500 futures fell by 1.8% and Nasdaq futures were down 2.6% – but the market had rebounded in late morning trading.
As they have for months, administration officials are expected to continue to underscore Biden’s commitment to lower prices in part by highlighting some of Democrats’ recent legislative accomplishments — such as passing the Inflation Reduction Act – which the White House says will ultimately help fight inflation.
Inflation has moderated in recent months, mainly due to lower energy prices. The average price of a gallon of gasoline has fallen for 98 straight days in the summer to $3.68 from a record just above $5. But prices soared for nearly a month, hitting $3.91 a gallon, according to AAA. Meanwhile, prices for food, housing and the like have risen with no end in sight.
For the White House, the new data exacerbates a two-pronged problem that has plagued the administration for months. With less than a month to go until Election Day, the administration’s failure to secure a clear trend of decelerating inflation — quietly seen as its primary goal ahead of the vote — underscores the political vulnerability Democrats are facing. confronted on an issue that comes up in poll after poll as a priority for voters.
The economy and inflation remain critical issues for voters just weeks away from the midterm elections. A new CNN poll conducted by SSRS showed that 90% of all registered voters said the economy was extremely or very important in deciding their vote on who to send to Congress, and 84% of voters said the same on the issue of inflation.
Overall, however, the numbers are just the latest data point the market sees as likely to lead to the continuation – and unprecedented in recent history – of aggressive rate hikes from the Fed.
While Biden and his team have publicly given the central bank the space it needs to make its policy decisions without political interference, he is fully aware that the rapid pace of rate hikes makes it increasingly likely that the measures will tilt the United States in recession. That would likely undo some of the clear gains officials point to for low- and middle-income Americans due to Biden’s major legislative victories.
A number of industry leaders and economic pundits are warning of the possibility of a recession in the coming months, but Biden insisted in public that he doesn’t believe there will be a recession, saying this week, “I don’t think there will be a recession.”
“If it does, it’s going to be a very mild recession. Which is to say, we’re going to go down a little bit,” Biden told Jake Tapper on Tuesday in an exclusive interview on “CNN Tonight.” “It’s possible. Look, it’s possible. I’m not anticipating it.”
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