Prof. ST Hsieh
Director, US-China Energy Industry Forum
June 11, 2022
The following headlines all point to President Biden is facing a tough mid-term election on November 8, 2022. But it is the US public on the main streets who are already suffering and will keep suffering.
It does not matter much who’s fault or what caused this high inflation. President Biden is responsible for taking actions effectively to tame the inflation. Win or lose of mid-term election for Biden and his party should not be the only issue. The price that US public will pay for his policy, especially if he fails, should be the top priority.
Of course, the world is in turmoil, and the many look to US for leadership, because many nations are in a worse shape than the USA. President Biden promised that US is back to lead the world, after President Trump’s MAGA movement isolating the US from the world stage for four years. Biden did inherit a broken global order, racked by USA. But Biden has been in office for almost one-year and half, using a Reagan’s commence rhetoric: are we better off now than 1.5 years ago? The answer is obvious!
Of course, Biden has not intentionally done anything bad, but his administration has not been able to mitigate any problem, whether domestic or global. In fact, issues like inflation exacerbated under his watch. The reason for his very low domestic approval rating is not because “his messages” need be polished or focused on his accomplishment. Frankly, it is sugar coating as Biden has not accomplished much yet.
Biden’s mid-term election is similar to college mid-term test, if so his grade at best is incomplete as of now. To make up his grade, Biden should realize his bandwidth, specifically his team’s bandwidth, is limited and time is short, so focus on the challenges that voters care the most including baby formula shortages and the embarrassing shortage of tampons. It is embarrassing because it should never happen in the USA, the greatest power in the world. It did not happen anywhere else! It could be a public image disaster if someone offers help to Biden at the Summit of Americas last week!
We wish Biden the best of luck because the US depends on his luck if nothing else.
Gas prices present glaring problem for Biden
Alex Gangitano Sat, June 11, 2022, 2:00 PM
Skyrocketing gas prices are a glaring problem for the White House with no clear, immediate solution.
While the administration began the month by pivoting heavily toward its economic message, political watchers say the attempt has so far fallen flat, especially as the national average for a gallon of gas hits a record $5.
That, along with inflation, presents a major political challenge for Biden and Democrats going into the midterms. Eighty-five percent of voters said they think inflation is a very serious or somewhat serious problem, according to an Economist-YouGov poll from earlier this month. In the same poll, 44 percent of respondents said Biden has “a lot” of responsibility for the inflation rate and 31 percent said he has “some.”
Energy Secretary Jennifer Granholm told CBS News this week that Americans should brace for a rough summer, with a top energy agency predicting fuel prices may not come down to less than $4 per gallon until the fall or winter.
“There will be some relief on the horizon, but during the summer driving season, it is going to be rough, no doubt about it, because we have such a demand and supply mismatch on the global market for oil,” Granholm said.
The president and his administration have pointed to steps they’ve taken in recent months to try to pump the brakes on rising gas prices.
Biden has ordered the release of millions of barrels of oil from the Strategic Petroleum Reserve to boost supply, pushed for nations in the Middle East to boost production, lifted restrictions on the sale of fuel with higher ethanol content, and promoted renewable energy sources such as electric vehicles and solar power.
But the reality, as even some Biden administration officials acknowledge, is the president has little sway over day-to-day gas prices, which are often at the mercy of global supply chains and have been impacted by the Russian invasion of Ukraine.
“This is, in large part, caused by [Russian President Vladimir] Putin’s aggression,” Commerce Secretary Gina Raimondo said on CNN this week. “Since Putin moved troops to the border of Ukraine, gas prices have gone up over $1.40 a gallon, and the president is asking for Congress and others for potential ideas. But, as you say, the reality is that there isn’t very much more to be done.”
Friday delivered another blow to the Biden administration with the release of a poor inflation report that showed consumer price growth spiked in May. The Labor Department’s consumer price index rose 1 percent last month alone and 8.6 percent in the 12-month stretch ending in May.
Republican strategist Doug Heye argued the Biden administration has had a lackluster response to inflation that has contributed to the hit his approval rating has taken and the low marks he has received on the economy.
“There seems to be, on some of these issues, just a shrugging of the shoulders, and that’s why you see, overwhelmingly, Biden’s handling of the economy is unpopular,” he said. “Obviously what’s happened in Ukraine has caused a spike, and there’s nothing wrong with talking about that, but that seems to be the entire explanation when inflation has gone up every month that Biden has been president.”
Biden on Friday stressed that he is sympathetic to the impact of high inflation on American families.
“I understand Americans are anxious, and they’re anxious for good reason,” he said in remarks at the Port of Los Angeles.
“Make no mistake about it: I understand inflation is a real challenge to American families,” he added. “Today’s inflation report confirmed what Americans already know: Putin’s price hike is hitting America hard. Gas prices at the pump, energy and food prices account for half of the monthly price increases since May.”
He called on Congress to pass legislation to cut shipping costs and the costs of energy bills and prescription drugs as well as tax reform so big corporations pay more.
Part of the challenge for the White House, however, is that many Americans don’t realize Biden doesn’t control gas prices, said Matt Bennett, a strategist with centrist think tank Third Way.
“I think he needs to get caught trying to do everything possible. Haul the CEOs of the oil companies in to the White House and demand that they tell him exactly what they need to get production up in the short term,” Bennett said.
The White House said it was shifting gears toward a monthlong campaign in June to talk up the economy and to show the White House is prioritizing inflation while pushing the positives it has delivered on the economy.
Much of the focus has been on strong jobs numbers and consistent messaging that the White House is aware of the impact of inflation on families. The president penned a Wall Street Journal op-ed outlining his ideas to tame inflation, and he has repeatedly contrasted his push for lower family care costs with that of Sen. Rick Scott (R-Fla.), whose economic agenda calls for potential cuts to programs such as Medicare and Social Security.
Biden reiterated on Friday that the U.S. is dealing with inflation from a position of strength, touting again the low unemployment rate.
Democratic strategist Antjuan Seawright argued that the president’s focus on the positives of the economy will resonate with voters in the midterm elections this fall.
“From a messaging standpoint, I think [Democrats] have to demonstrate district by district, race by race, what efforts we have done to save the economy,” Seawright said. “Make sure we tell the story and not let the story be told about us.”
U.S. inflation hits 40-year high of 8.6% in May
Fri, June 10, 2022, 10:29 AM
STORY: U.S. inflation accelerated in May with the Labor Department’s consumer price index rising 8.6% from a year ago – marking the highest level in more than four decades.
Economists had hoped that the annual CPI rate peaked in April and expected an increase of 8.3% for May.
The stock market plummeted on the news from the Labor Department, which reported Friday that gasoline prices hit a record high and the cost of services rose further, suggesting that the Federal Reserve could continue with its 50-basis-point interest rate hikes through September to fight inflation.
Gas prices were flirting with an average $5 per gallon on Friday, indicating that the monthly CPI would remain elevated in June.
Inflation in May was also boosted by higher prices for other goods like food, surging amid geopolitical conflict and health restrictions in China that dislocated supply chains.
Rent prices, hotel accommodation costs and airline fares were also high last month. There had been hope that the shift in spending from goods to services would help to cool inflation. But a tight labor market is driving up wages, contributing to higher prices for services.
Friday’s inflation report was published ahead of an anticipated second 50-basis-point rate hike from the Fed next Wednesday. The U.S. central bank is also expected to raise its policy interest rate by an additional half a percentage point in July.
US inflation hits 40-year high of 8.6% as food, gas and shelter costs rise
Fri, June 10, 2022, 7:19 AM
Inflation in the US rose unexpectedly last month to a fresh four-decade high of 8.6%, the labor department said on Friday.
The latest consumer price index (CPI) figures showed that the cost of living increased by one percentage point from April and was broad-based, with the indexes for shelter, gasoline and food being the largest contributors.
Gas prices have been soaring across the US, approaching $5 a gallon this week – $1.90 more than a year ago. According to the latest CPI report the energy index rose 3.9% over the month, with the gasoline index rising 4.1%. Other major component indexes also increased. The food index rose 1.2% in May as the food at home index increased 1.4%.
May’s rise was driven by sharp increases in energy costs, which rose 34.6% from a year earlier, and groceries, which jumped 11.9% on the year. Food and energy prices are more volatile than other categories included in the CPI, and the labor department publishes a “core prices” index which excludes them. It rose 0.6% from April.
The news sent stock markets into a tailspin. The S&P 500 and Dow indices fell over 2% and the tech-heavy Nasdaq was down over 3.5%.
Inflation fears have also battered Joe Biden’s poll numbers and his administration has sought to blame Russia’s invasion of Ukraine for rising prices. The war in Ukraine and the continuing disruption to global trade caused by the coronavirus pandemic have both contributed to rising prices for food and energy. But there were worrying signs of inflation spreading. Shelter costs were up 5.5% compared with a year ago. After three months of declines, prices for used cars and trucks rose 1.8% in May from April and are up 16.1% over the year.
The yearly increase in inflation was up from the 8.3% increase in April and higher than economists had expected. Inflation is now running at a rate last seen in December 1981. The Federal Reserve meets next week and is expected to once more raise interest rates as it struggles to tamp down rising prices.
Last month the Fed announced its largest hike in interest rates since 2000, increasing interest rates by 0.5 percentage points, and economists are speculating the Fed may move to increase the pace of rises.
“What an ugly CPI print,” said Seema Shah, chief strategist at Principal Global Investors. “Not only was it higher than expected on almost all fronts, pressures were clearly evident in the stickier parts of the market. The decline in inflation – whenever that finally happens – will be painfully slow. The Fed’s price stability resolve is going to be really tested now.
“Policy rate hikes will need to be relentlessly aggressive until inflation finally starts to fade, even if the economy is struggling.”
Average U.S. gas prices top $5 a gallon, as surging energy costs squeeze economy
The upward march of fuel costs has emerged as one of the chief domestic political threats to the Biden administration ahead of the midterm elections.
Average U.S. gas prices hit $5 a gallon, as energy costs continue tremendous surge
The soaring prices, as tracked by the auto club AAA, are putting pressure on households and businesses nationwide — and they show little sign of letting up as the busy summer driving season begins. For the Biden administration, fuel costs are compounding political challenges in an election year.