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Tags: president joe biden | 7.5percentinflation | bidenflation | wages

Bidenflation Shrinking Paychecks by 3%

shredding/grinding money

By    |   Friday, 11 February 2022 09:48 AM EST

Inflation of 7.5% in the United States, a high not seen since 1982, is alarming economists and politicians alike.

Founding president of the Club for Growth and distinguished visiting fellow at The Heritage Foundation, Stephen Moore, says fiscal responsibility is one solution for inflation, but that it is unlikely to come from the Biden administration.

“Bidenflation is no longer a transitory brush fire, but a fast-spreading forest fire. With wages up 4.6% and prices up 7.5%, the purchasing power of Americans’ paychecks have shrunk by almost 3% in one year under Biden,” Moore says. “The solution: stop government spending, borrowing, and printing of money. Start by burying Build Back Better.”

Squeezed Household Budgets

Another expert, Greg McBride, chief financial analyst at Bankrate, says he was taken aback by how fast inflation spiked in January. “The CPI increased 0.6% for the month and exceeded the robust forecasts of a 0.5% jump. Even excluding the volatile food and energy components, which were both up 0.9% in January, the so-called ‘core prices’ increased 6% over the previous year…

“The price pressures on households just don’t end. Not only have home prices jumped 20% in the past year, but now many rents are too, rising 0.5% in the past month alone. Nothing squeezes household budgets more than the outsized increases we’re currently seeing on costs for shelter and housing.”

McBride tells Newsmax Finance that absolute necessities, such as energy costs, saw the largest price hikes. “The biggest drivers of the most recent inflation reading are categories that are absolute necessities: food, electricity and shelter. These price increases are pervasive and not something limited to discretionary spending,” McBride says, referring to the 40% increase in gas, the 20% increase in furniture, and 12% increase in new cars year over year, according to U.S. Department of Labor data.

Consumer Confidence Sinks

For McBride, inflation not slowing down is showing up in Americans’ views on the topic. “Consumer confidence is at recession-era lows despite unemployment at 4%,” he says. The underlying reason for Americans’ malaise is inflation.

“People are worried about rising prices and the impact that will have on their finances down the road,” McBride continues. “The economy is weighing heavily on confidence. Money is the No. 1 issue at the household level.”

Speaking about the 7.5%, and rising, inflation rate in the U.S. Roberto Perli, global policy research head at Cornerstone Macro, tells Politico, “Today’s report was not encouraging, but it’s premature to conclude that the Fed will move [up rates by half a percentage point] next month.” McBride, however, foresees higher interest rates as a matter of when, not if.

“The higher interest rates it will take to combat inflation will be just another form of inflation for borrowers, with variable rate debt such as credit cards, or variable rate private student loans,” McBride says.

Recession Worries

Politicians have expressed alarm about the rising inflation, as well. Senate Finance Committee Ranking Member Mike Crapo (R- Idaho) released a statement saying, “Small businesses cite inflation as the biggest challenge they face. Workers have lost purchasing power as they watch their wages being eroded and eaten up by, and wages aren’t keeping up with rising costs. This stealth tax was exacerbated by unnecessary deficit spending last year, and more reckless spending will only continue to fuel this inflation fire.”

Republican candidate George Santos, who is running for Congress in New York’s 3rd District, says prompt action is needed to avoid a recession. “If we don’t take back the reins of the out-of-control inflation in this country we will go into a very long recession,” Santos tells Newsmax Finance.

Santos further adds that he is extremely concerned about how inflation is impacting seniors and retirees. “Older Americans on fixed income will suffer the most” in what he calls an increasingly “unaffordable America, an America that has turned its back on its most vulnerable. People living on fixed incomes in their senior years will have nowhere to run for help, and will be forced to make difficult choices…Whether it be cutting back on the quality of their nutrition or whether they ration medication that they shouldn’t, those tend to be the places they seek to mitigate their cost.”

Julio Gonzalez, CEO of Engineered Tax Services Inc, is another expert concerned about inflation’s effects on seniors, telling Newsmax Finance, “Americans must face the hard facts that the value of the dollar is worth a lot less today than a year ago. It is difficult for seniors to raise their income through investments (due to volatility), social security and other revenue sources.”

© 2023 Newsmax Finance. All rights reserved.

Inflation of 7.5% in the United States, a high not seen since 1982, is alarming economists and politicians alike.
president joe biden, 7.5percentinflation, bidenflation, wages
Friday, 11 February 2022 09:48 AM
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