Time is running out on Democrats’ hopes to get inflation under control before the November elections.
Price increases hit a 40-year high of 8.5% in March, and history wasn’t offering comfort for the party in power. Since 1960, the biggest drop in inflation from March to October was 2.9 percentage points in 1975.
A decline of that magnitude would put the annual inflation rate at 5.6% by Election Day. Inflation hasn’t been that high during a midterm election season since 1990, when the annualized rate in October hit 6.3%.
Voters have been feeling the pressure of rising prices for nearly a year. It is putting intense pressure on Democrats, who control the White House and Congress, to do something about high prices or else get punished at the ballot box.
Emily King, 42, a stay-at-home mother of three from Paulding County, Georgia, said inflation is hurting her family “badly.” She said it is hard for her and her husband, who owns a handyman business, to deal with higher prices while raising three children.
“I mean, to go to the grocery store, $200 and it barely looks like we come home with anything. It is so empty. I am so disgusted,” she told The Washington Times. “Everything with gas and food, it is hard. Everything going up — it has definitely screwed us over.”
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President Biden will give another speech Tuesday about his plans to fight inflation and will criticize congressional Republicans for not helping his efforts.
Sen. Tom Cotton, Arkansas Republican, retorted on Twitter that Mr. Biden also has blamed high inflation on “chicken farmers, COVID, Big oil, Corporate greed [and the] Putin price hike.”
The Labor Department will announce April’s inflation rate Wednesday, and economists are not expecting a significant reduction.
“I don’t think inflation will be under control by November, if ‘under control’ means cutting [consumer price index] inflation from 8.5% to, say, 2.5 to 3%,” said James Dorn, vice president for monetary studies at the Cato Institute. “Supply bottlenecks could persist into 2023, and the monetary excesses that are now apparent from previous rapid money growth and stimulus spending still have to work their way through the system.”
Employers added 428,000 jobs in April, the 12th straight month of job growth, and the unemployment rate remained unchanged at a historically low 3.6%. Federal Reserve Chairman Jerome Powell said the U.S. economy is strong.
Still, voters aren’t feeling confident about the direction of the economy. In a CNN poll last week, only 23% of respondents said they thought economic conditions were somewhat good, down from 37% in December and 54% a year ago.
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In a poll last week by The Trafalgar Group for the conservative Convention of States Action, 38.5% of voters said that lowering inflation and fixing the economy is the most important issue to them in the upcoming elections. The next-highest concern was addressing climate change, at 15.9%.
Rosalina Mudd, 19, a resident of Nassau County in northern Florida who works as a clerk at a Publix grocery store, said inflation is making it harder to pay rent, buy groceries and pay off student debt. She and her fiancee had to find roommates to help pay for their three-bedroom apartment, and she cut back on college classes to work more.
“I was supposed to be part-time in college, but due to the increasing cost of living, groceries, etc., I have to drop my classes to just about one per semester so I can make sure I keep my 40-hour workweek to make ends meet,” Ms. Mudd recently told The Times.
Inflation also has become the top concern among Hispanic voters, according to an Axios-Ipsos poll released in March. A Quinnipiac University poll in April found that just 26% of Hispanic voters approved of Mr. Biden’s job performance, the lowest of any voter group.
The Federal Reserve raised a key interest rate last week by a half percentage point and said more rate hikes will be needed this year to reduce inflation. The central bank’s target range for annual inflation is about 2%.
“I do expect that this will be very challenging. It’s not going to be easy,” Mr. Powell said. “And it may well depend, of course, on events that are not under our control.”
Many economists are expecting roughly two more years of rocky economic conditions, including a possible recession this year. The U.S. economy contracted in the first quarter, and high fuel costs continued putting upward pressure on overall consumer prices.
The price of gas hit $4.32 per gallon on Monday, up from $4.12 a month ago and $2.96 a year ago, according to AAA.
“Disruptions to supply have been larger and longer-lasting than anticipated, and price pressures have spread to a broader range of goods and services,” Mr. Powell said. “The surge in prices of crude oil and other commodities that resulted from Russia’s invasion of Ukraine is creating additional upward pressure on inflation. And COVID-related lockdowns in China are likely to further exacerbate supply chain disruptions as well.”
Mr. Dorn said the Fed will be under “strong political pressure” to slow the planned monetary tightening of its balance sheet “to avoid pushing the economy into recession before the November elections.”
“I expect the Fed to act decisively to tame inflation, but in a measured way,” he said. “Consequently, CPI inflation could still be 5% or 6% by the midterms. And there is a reasonable chance the economy could face stagflation by year-end or early next year — if supply shortages continue (or worsen) and the Fed backs down from pushing rates higher — to support asset prices” such as stocks and home values.
Stagflation is persistently high inflation combined with high unemployment and stagnant demand.
Ms. King, the Georgia mother of three, said inflation has dashed hopes for her and her husband to get health coverage for themselves. She said high prices are forcing the family to make trade-offs that are unpopular with her children.
“We can’t afford the insurance — health insurance,” she said. “We have had to give up a lot of things the kids like. They want to do sports and stuff like that, but it’s either feed them or let them be involved in sports. It is either one or the other.”
Kevin Evans, president of Evans Construction in Rome, Georgia, said his company burns 6,000 to 7,000 gallons of fuel a week and that cost has doubled in recent years.
“When you bid these grading jobs, you bill labor, equipment and fuel, and just the fuel item is what would be double,” Mr. Evans said. “Instead of a $100,000 line item, it would be $200,000.”
He said his firm is passing along the additional cost to his customers, who understand the situation.
“They bid on the stuff, and all the prices are coming up higher,” Mr. Evans said. “All my competitors are having to absorb the same costs.”
• Susan Ferrechio contributed to this report.