Some Democrats and economists are concerned that U.S. President Biden is doing too much, too fast in his quest to see America out of coronavirus crisis. According to the analysts, so much spending could crank up inflation. As a result, it will put Biden’s economic legacy at serious risk.
Some employers are also complaining that people aren’t taking jobs due to the boost to unemployment payments. However, Biden wants to spend more.
Larry Summers, former Treasury Secretary under President Bill Clinton, started warning about impeding inflation in February. Furthermore, he’s more concerned now than he was several months ago. According to Summers, new data is pointing more towards higher inflation than he expected and sooner.
Meanwhile, the White House says more Americans will join the labor force when the U.S. is fully vaccinated and people feel safe going back to work. The White House also stated that once schools reopen in the fall, working parents will look for jobs instead of looking after their kids as they have to do now due to online studying.
Besides, White House officials insist that inflation will be temporary. They disagree that enhanced unemployment insurance is encouraging people to stay at home. However, they hinted that employers might need to offer higher wages to convince some Americans to look for work.
How Big Is the Inflation Threat?
Most Americans haven’t had to think about inflation much for a decade or two. However, now it has reemerged as a concern as the U.S. economy recovers from the COVID-19 pandemic.
On May 12, the authorities announced that the consumer price index jumped by 4.2 percent in April 2021 compared to a year earlier. That is the fastest increase since the Great Recession.
Higher prices for some of the basics of the family budget, including housing, food, and fuel, are driving up the inflation benchmark higher.
Economists think that a small amount of inflation, approximately 2%, is inevitable and even desirable. It tends to encourage consumer spending. However, higher inflation may cause serious problems to the economy in the long term.