From the moment that Joe Biden assumed the role of Commander in Chief, economists began to wonder and worry. We’d be transitioning from a very business-minded President to someone who has spent more than half of their life suckling at the taxpayer teat. Would our current prosperity survive such a wild, polar shift?
And while no dollar-tied disaster has yet occurred in earnest, there are signs that trouble is coming over the horizon, particularly when it comes to Biden’s handling of the current rate of inflation in America.
U.S. consumer prices jumped by the most in nearly four decades as the new year started, sapping the savings of American families, diminishing the purchasing power of worker paychecks, and putting pressure on the Federal Reserve to hike interest rates beginning in March.Advertisement - story continues below
The consumer price index climbed 0.6 percent from a month before, the Department of Labor said Thursday. Compared with January of last year, consumer prices are up 7.5 percent.
Economists had expected prices to rise 0.4 percent on a monthly basis and 7.2 percent above a year ago’s prices.
Economists had already begun to suggest that some drastic measures might be in order.
The Federal Reserve is expected to raise its target interest rate in March, months earlier than market watchers thought last year. Swaps prices prior to the release of consumer prices on Thursday implied about a twenty-five percent chance that the Fed will raise its target by two notches, a half a percentage point, at the March meeting, breaking the recent pattern of raising the target by just one-quarter of a percentage point at each meeting. After the release, the odds of a half-point hike jumped to 44 percent. Fed watchers are also debating how many times the Fed will hike rates, with swaps prices now implying at least three and perhaps four hikes this year. Many analysts, however, increasingly think the Fed will hike five to seven times this year as inflation proves less tractable than officials believed.
The squeeze is being felt around the nation, and is undoubtedly affecting the way in which the US taxpayer is viewing the Democratic Party.