(July 22): President Joe Biden dismissed concerns that the U.S. will experience persistent inflation as the economy emerges from the pandemic while cautioning that restaurants and others in the hospitality sector may take longer to recover.
“There will be near-term inflation” because the economy is picking back up, Biden said Wednesday evening at a CNN town hall meeting held in Cincinnati. But most economists believe that “it’s highly unlikely that it’s going to be long-term inflation that’s going to get out of hand,” he said.
He later told a restaurant-group owner who cited hiring challenges that “your business” and others in the hospitality and tourism industries may be “in a bind for a while,” in part because workers in the sectors are seeking better wages and working conditions.
“It really is a matter of people deciding now that they have opportunities to do other things,” he said. “People are looking to make more money and to bargain.”
Inflation has become a political liability for the White House in recent weeks. The U.S. experienced the largest surge in consumer prices in more than 12 years last month, with a Labor Department gauge rising 5.4% compared to one year ago.
“Inflation is driving the cost of everything through the roof,” Senate Minority Leader Mitch McConnell of Kentucky said at a news conference Wednesday opposing Democratic calls for Biden’s long-term social spending plan.
A significant portion of the recent inflation has been tied to areas of the economy experiencing parts shortages or surging demand stemming from reopening, including cars, hospitality and lumber -- a point Biden has stressed and reiterated in Wednesday.
“It’s rational, when you think about it. The cost of an automobile is kind of back to what it was before the pandemic,” Biden said. Auto prices have driven much of the pickup in overall inflation though are in fact considerably higher than they were before the pandemic.
Republicans have also blamed Biden and Democrats for labor shortages at restaurants and other low-wage businesses, alleging unemployment benefits made more generous by rounds of pandemic relief measures are discouraging Americans from returning to work. Biden has said such businesses should offer higher pay in response, calling rising wages “a feature” of his economic plans.
Job openings have hit a record high even as unemployment remains elevated. In the hotel and restaurant industries, vacancies totaled 1.25 million in May, up from 807,000 in February 2020.
“A lot of people who now work as waiters and waitresses decided that they don’t want to do that anymore,” Biden said.
His town hall remarks come at a key point in the debate over his US$4 trillion economic agenda. Republicans blocked debate Wednesday on a US$579 billion bipartisan infrastructure package championed by Biden. Senators working out details of the package say they are close to a final agreement, and key Republicans said they’d be willing to vote on the bill as soon as Monday.
Democrats also are pushing a US$3.5 trillion blueprint that contains many of the president’s social spending priorities.
Republicans are seeking to make the increase in consumer prices a cornerstone of their argument against Biden and his handling of the economy. They warn his proposed long-term social spending and taxes on the wealthy would cause inflation to spiral out of control.