WASHINGTON (TND) — In his Super Bowl interview with NBC's Lester Holt, President Joe Biden said he's listening to economists who say inflation will get better by the end of 2022.
“It ought to be able to start to taper off as we go through this year. In the meantime, I’m gonna do everything in my power to deal with the big points that are impacting most people in their homes," Biden said.
On Thursday, the Consumer Price Index Summary from the U.S. Bureau of Labor Statistics showed prices for everyday necessities like food, shelter and energy, are 7.5% more expensive than they were this time last year.
According to RealClearPolitics, Biden's average approval rating of his handling of the economy is 38.3%. As inflation becomes more of a political liability for Democrats ahead of the November midterms with razor-thin majorities in Congress to defend, lawmakers are considering legislative avenues to give Americans relief from rising prices.
This week Sens. Mark Kelly, D-Ariz., and Maggie Hassan, D-N.H. introduced the Gas Prices Relief Act to temporarily suspend the federal gas tax, which is 18.4 cents per gallon, until Jan. 1, 2023.
“We need to continue to think creatively about how we can find new ways to bring down costs, and this bill would do exactly that, making a tangible difference for workers and families," Hassan said in a statement.
University of Michigan Professor of Economics and Public Policy Justin Wolfers said a gas tax holiday is not only bad climate policy, but it wouldn't be economically effective.
“If we eliminate taxes on gas tomorrow, that will reduce the price of gas. That’s a one-off effect but remember, inflation is not just that prices got high, it’s that they keep rising and keep rising and keep rising," Wolfers said. "All it will do is it will reduce the price of one good for a little while.”
What addressing inflation comes down to, Wolfers said, is the pandemic.
“One of the primary drivers of American inflation is the coronavirus overseas. That says that we have not just a moral obligation but an economic self interest in trying to vaccinate the rest of the world," Wolfers said. “I’m not saying that that’s gonna eliminate all inflation but it’ll get rid of those supply side impulses and bring it down to levels where we can think of more normal management of the economy.”
Wolfers said the country should be focused more on that global effort than political posturing.
“If it was just about the Democrats mismanaging the economy, then America would be the only country with rising inflation. That’s not true. Almost every country has rising inflation," Wolfers said.
Most economists agree the most effective tool for easing inflationary pressure is monetary policy changes by the Federal Reserve, which is expected to raise interest rates several times this year. Northwestern University Professor of Economics Martin Eichenbaum said he hopes to see a clear signal from the Fed soon. He fears inflation will become embedded in people's expectations, leading to a cycle of higher wages to meet higher prices.
“I think the longer that the Fed waits to show how serious they are about getting things under control, the greater the dangers are," Eichenbaum said.