A key measure of inflation showed consumer prices rising the fastest in four decades, the government reported Thursday, a day after the White House boasted that President Biden “saved Christmas” by helping to speed up delivery of gifts that are costing Americans more.
The personal consumption expenditures (PCE) index rose 5.7% in November, the Bureau of Economic Analysis said. It was the fastest increase in the Federal Reserve’s favorite measure of inflation since July 1982.
Total incomes rose by 0.4%, slightly less than in October. But consumer spending rose 0.6%, as people were shopping for the holidays.
The report of persistently high inflation comes as the White House is increasingly portraying the economy as having turned a corner from the COVID-19 pandemic. Republicans in Congress, who are uniformly opposed to Mr. Biden’s foundering $1.75 trillion social welfare and climate bill, reiterated that the proposal would only worsen inflation.
“What’s Joe Biden’s solution? More of the same reckless spending that is driving inflation in the first place,” Sen. Tom Cotton, Arkansas Republican, wrote on Twitter.
White House press secretary Jen Psaki said Thursday that Americans are better off than they were a year ago.
“We are not in the same place we were at in the beginning of the pandemic, and families have more money in their pockets,” she said. “Americans on average had nearly $100 more in their pockets each month than they did last year, after accounting for inflation.”
The Republican National Committee said inflation will cost the average family about $3,500 this year, pointing to an analysis by the University of Pennsylvania Wharton School’s budget model. The RNC said inflation this year has amounted to a 6% or 7% regressive tax on families that can least afford it.
Ms. Psaki pointed to the number of Americans filing for unemployment benefits dropping from about 20 million a year ago to about 2 million this month as further proof of a strong recovery.
“Thanks to the [$1.9 trillion] American Rescue Plan and our successful vaccination program, Americans are back at work at a record-setting pace,” she said.
Administration officials also note that the price of gasoline has dropped since last month by roughly 10 cents per gallon to a national average of $3.29.
Earlier this week, Ms. Psaki bragged that the White House had “saved Christmas” by taking steps to open up a bottleneck of shipping delays around the country.
Still, the new report on consumer prices shows that high inflation has continued through this year, months after Mr. Biden assured voters that it would be a temporary problem. In an interview with a South Carolina television station last week, Mr. Biden joked about Christmas being more expensive this year, even as the easing of supply chain problems is making products more available.
“The problem is they’re going to be available, it’s gonna cost you money,” Mr. Biden said, chuckling. “It’s gonna cost Santa some money.”
Economists’ predictions vary on how long high inflation will last. Some economists expect consumer prices to peak early next year. But economist Peter Schiff said on Twitter that a “tight” Federal Reserve in 1982 was able to rein in inflation, but “there’s no chance today’s ultra-loose Fed will do the same.”