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We did it, y’all! Get the Champagne on ice and gather the townsfolk because America hath slain the beast known as inflation. (Or, at least, it’s hit a turning point.)
ICYMI: Last month, for the first time in four years, prices on everyday goods and services actually fell. In other words, this June was the first time since the pandemic started that we paid less for stuff compared with the previous month.
The surprise price decline is seismic news, at least among econ wonks and a narrow strata of reporters who follow this stuff with the fervor of a tween Swiftie.
“Inflation is dead, and jobs are alive,” labor economist Aaron Sojourner tells me. “We have a very good chance right now of sticking the soft landing.”
Huzzah! Maximum employment and price stability? Let’s party.
But wait — what’s that I hear? Not the riotous cheers of American consumers dancing in the streets. Not a chorus of workers singing about the strongest labor market of their lifetimes, and no — I can’t even pick up on the sound of what I’m sure is an army of economists demanding sainthood for Jay Powell.
Instead, the single best economic news of the past decade is but a murmur of chit-chat, barely audible against a clamor of politicos shouting about President Joe Biden’s age.
And that has got to drive the Biden campaign absolutely nuts.
Bidenomics worked and no one cares
For the past three years, President Biden’s biggest political liabilities have been painfully obvious: his age and inflation.
One those problems has more or less evaporated — inflation has been steadily cooling, from 9% to 3% on annualized basis, for the past two years. Consumers are finally expressing some optimism, if not for the economy as a whole then at least for their own personal financial situations, the stock market and cooling inflation.
Of course, everyone knows intellectually that the president doesn’t control the economy. But that’s never stopped voters from blaming whoever’s in office for, well, just about anything, and similarly no party would miss an opportunity to claim credit for an economic boom.
To be sure, American households aren’t suddenly going to forget the whiplash of inflation that has strained their finances. It remains true, as my colleague Alicia Wallace notes, that overall prices are a good 20% higher than they were in February 2020. (In recent history, the index would typically rise about 10% over a 54-month period, Labor Department data shows.)
And nothing in economics goes in a straight line. Just 24 hours after the jaw-dropping consumer price report, Friday brought some unexpected bad news around producer prices, which rose 0.2% in June after holding flat in May.
Still, Thursday should have been a day for the White House to spike the football and double down on a message that has, historically, fallen flat — that Bidenomics is working.
Unfortunately, if you’re in the Biden camp, age — unlike inflation — only goes one direction.
Rather than doing a victory lap, Biden on Thursday was preparing for a high-stakes news conference in front of a ravenous White House press corps that focused their questions almost entirely on his fitness to lead. During the press conference, he touted the inflation numbers repeatedly, comparing the positive economic situation now to the pandemic mess he inherited when he started the job. But the press’ questions focused mostly on his verbal slipups and chances of beating former President Donald Trump.
Bottom line: Thursday’s inflation report is an indisputably positive development that could put some wind in the sails of a Democratic campaign — a powerful blow against the fictional Republican narrative about a US economy in the gutter. The White House can finally cross out “inflation” on its list of presidential liabilities. But as long as Biden’s age dominates the conversation, it’ll just be the econ nerds sipping Champagne alone.
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