WASHINGTON – Inflation is putting tremendous stress on the pocketbooks of Americans and is becoming a political headache for President Biden. Now top economists see no end in sight.
As millions of Americans prepare to host Thanksgiving dinner, it's not just the cost of turkey and pie putting a strain on family budgets. This week the Consumer Index which keeps track of what people are paying jumped 6.2-percent, recording the highest level since 1990.
"It's a ripple effect and puts a challenge on us as we go into the holiday season," says Aaron Johnson who owns Oasis Fresh Market in Oklahoma.
A CNBC survey shows inflation now ties with coronavirus as the biggest concern facing Americans and it's punching the president politically.
Republicans were hitting the president hard even before the consumer index quantified Americans' financial pain.
"We have a raging inflation as bad, some would argue as back in the late 70s, early 80s," says Senate Minority Leader Mitch McConnell (R-KY).
It's a direct result, he says, of flooding the country with money through President Biden's $1.9 trillion COVID relief plan earlier this year.
The president says the infrastructure plan passed this week will help alleviate bottlenecks in the supply chain. "And thanks to those steps we're taking, very soon we're going to see the supply chains start catching up with demand," Biden said.
However, critics say his policies are the problem, like cutting back on the U.S. fuel supply.
Today a gallon of regular gasoline costs $3.41, up more than a dollar from a year ago, and as winter approaches, the Energy Department estimates heating bills will be up by as much as 54 percent.
"It's going to cost $500 more this year. They should plan on that," estimates Scott MacFarlane with MacFarlane Energy.
And while some blame the supply chain problems for inflation, others point out that Europe has those supply chain issues too, but without inflation. Instead, many point to government spending.
Democratic economist Larry Summers warned in February that the Democrats' COVID relief plan could lead to inflation. He was blasted by the White House which called inflation "transitory."
Now some economists say it could easily last another year.
Top economic advisor to President Obama, Jason Furman says, "Inflation is not slowing. It's maintaining a red-hot pace.''
And now as Biden and Democrats work to infuse $1.75 trillion into the economy through his Build Back Better bill, they're facing more political roadblocks. Sen. Joe Manchin (D-WV) signals he's concerned new federal spending may make inflation even worse.
"By all accounts, the threat posed by record inflation to the American people is not 'transitory' and is instead getting worse. From the grocery store to the gas pump, Americans know the inflation tax is real and DC can no longer ignore the economic pain Americans feel every day," he tweeted.
By all accounts, the threat posed by record inflation to the American people is not “transitory” and is instead getting worse. From the grocery store to the gas pump, Americans know the inflation tax is real and DC can no longer ignore the economic pain Americans feel every day.
— Senator Joe Manchin (@Sen_JoeManchin) November 10, 2021
Americans do know the pain because even though salaries are up, prices are up even more meaning people are falling behind.
So economists and business leaders are looking to the Federal Reserve to do more to slow inflation. However, that could mean multiple hikes in interest rates which could hurt the economy.
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