People are feeling it, no doubt about it. And it’s not something hat’s easily fixed since it’s mostly a result of the pandemic and the ensuing supply chain and labor issues. It’s real but it isn’t the result of anything that Biden has done. We’ll just have to hang on tight and hope it works itself out without the Fed deciding they need to create a recession.
But the big question looming over the Democratic Party has been whether or not this inflation was going to succeed in blowing up the Build Back Better legislation with His Majesty the King of Manchin suggesting that this was the latest reason for him to do it.
Luckily he’s going to have a hard time making that case after this:
U.S. President Joe Biden’s infrastructure and social spending legislation will not add to inflationary pressures in the U.S. economy, economists and analysts in leading rating agencies told Reuters on Tuesday.
Biden has spent the past few months promoting the merits of both pieces of legislation – the $1.75 trillion “Build Back Better” plan and a separate $1 trillion infrastructure plan.
The two pieces of legislation “should not have any real material impact on inflation”, William Foster, vice president and senior credit officer (Sovereign Risk) at Moody’s Investors Service, told Reuters.
The impact of the spending packages on the fiscal deficit will be rather small because they will be spread over a relatively long time horizon, Foster added.Report ad
Senator Joe Manchin, a centrist Democrat, has previously raised inflationary concerns in relation to Biden’s social spending plan, with a report earlier this month suggesting he may delay the passage of the Build Back Better legislation. read more
“The bills do not add to inflation pressures, as the policies help to lift long-term economic growth via stronger productivity and labor force growth, and thus take the edge off of inflation,” said Mark Zandi, chief economist at Moody’s Analytics, which operates independently from the parent company’s ratings business.
Certainly the markets seem to believe this inflation is temporary. That doesn’t take the sting out of it for the average American but it should inform Joe Manchin that his worries about the bill are not well taken.
Not that they are genuine. He is just flailing about trying to find a reason to delay it. But this helps a little bit.