Biden insists inflation is 'expected' and only 'temporary' and says his multi-trillion dollar spending packages will LOWER prices in the long run after a record-breaking spike of 5.4% in June
President Joe Biden on Monday hit back at growing concerns that his massive spending plans were driving up inflation, insisting that price rises were 'temporary' and 'expected' as the nation tried to bounce back from the pandemic.
Fears of inflation are emerging as a key obstacle for passing his infrastructure and family plans.
And Republicans are using the data to argue that the administration's tidal wave of spending is making life worse for working families by driving up prices of staples such as milk and gas.
But Biden said the investments would rebuild U.S. supply chains and ease pressure on production that had contributed to rising prices.
'If we make prudent, multi-year investments in better roads, bridges, transit systems and high speed internet, in a modern resilient electric grid, here's what will happen: It breaks up the bottlenecks in our economy; goods get to consumers more rapidly and less expensively; small businesses create and innovate much more seamlessly,' he in a White House address from the State Dining room.
'These steps will enhance our productivity, raising wages without raising prices.'
The economy roared back into life as vaccinations became available in the spring, COVID-19 restrictions were loosened and Biden's $1.9 trillion stimulus package was spent.
Forecasts suggest the country could see as much as 7 percent growth this year.
Those good feelings came at a cost. A report published last week showed a 5.4 percent surge in inflation in June compared to a year ago.
'Some folks have raised worries that this could be a sign of persistent inflation,' said Biden. 'That's not our view.
His comments are the latest public attempt to reassure an anxious public, even though Federal Reserve chairman Jerome Powell last week said inflation could remain elevated for months.
President Biden hit back at inflation fears, saying that price rises were 'temporary' and 'expected' as the nation tried to bounce back from the pandemic
Inflation jumped 5.4 per cent in June compared to a year ago
The cost of staples such as milk, bacon and coffee surged in June in comparison to last year
'Our experts believe and the data show that most of the price increases we've seen were expected and are expected to be temporary.
'The reality is you can't flip the global economic light back on and not expect this to happen.'
However, Monday brought fresh pandemic worries.
Markets around the world plunged amid fears that faster-spreading coronavirus variants would undo progress and set back the economic recovery.
The Dow fell 725 points, about 2.1 percent, in its worst day since October.
The turmoil may seem out of step with America, where restrictions were eased weeks ago, but comes as the World Health Organization says global cases are rising again.
That may underline the Biden administration's case that more spending is needed.
Biden said his infrastructure and families agenda must be passed in order to sustain the economic momentum of his first six months in office.
Each comes with a substantial bill - $1 trillion for a bipartisan infrastructure package and 3.5 trillion in social services, education and support for families.
Senate Majority Leader Chuck Schumer has set a Wednesday deadline for a procedural vote on the infrastructure bill, even as senators continue to negotiate the details.
Biden said investments would rebuild U.S. supply chains and ease pressure on production that had contributed to rising prices
House Republicans kept up their attacks on Monday, outlining how inflation would increase the burden on 'hard-working middle-class families'
Biden said his 'blue-collar blueprint' for building back the economy was crucial to beating down inflation.
'This is the best strategy to create millions of jobs and lift up middle class families, grow wages and keep prices affordable for the long term,' he said.
In the same way he said, more affordable childcare and elder care would help more people into the work force, raising wages without raising prices.
'That won't increase inflation, it'll take the pressure off of inflation,' he said.
Biden delivered his remarks a day before marking six months in power. He said it was an appropriate point to show that forecasts for his handling of the economy - such as it would mark the death of capitalism - were wrong.
'It turns out capitalism is alive and very well,' he said.
'We're making serious progress to ensure that it works the way it's supposed to work: For the good of the American people.'
Republicans see an easy attack line and have begun to refer to 'Bidenflation' on the campaign trail.
House Republican leader Kevin McCarthy tweeted on Monday: 'Prices on everything from gas to groceries are skyrocketing.
'Inflation is hitting hard-working middle-class families the hardest. A key driver of these price increases and increased costs of living is crystal clear → massive increases in government spending by the Democrats.
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