by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The producer price index has reached a new record of 11.2%, and detractors fear President Joe Biden’s fiscal agenda could make things worse.
Producer prices increased a scorching 11.2% for the year ending in March, according to a report Wednesday from the Bureau of Labor Statistics, with the inflation rate up 1.4% from just the previous month. Inflation fears were raised when the White House backed the $1.9 trillion American Rescue Plan spending bill one year ago, with critics now claiming vindication.
“This runaway inflation is a direct result of President Biden and congressional Democrats’ reckless spending that has devalued the dollar,” said Alfredo Ortiz, president of the conservative advocacy group Job Creators Network. “Russia is merely a scapegoat. Small businesses must support candidates this November who promise to rein in spending and inflation.”
Some economists warned that the spending bill would overheat the economy, which was already in a highly stimulative environment thanks to near-zero interest rates and two previous pandemic-related stimulus measures during the previous administration.
Secretary of the Treasury Janet Yellen said last May that the Federal Reserve may need to raise interest rates to prevent the economy from overheating. But the rate was not raised until last month, and even then by only 25 basis points, or one-quarter of 1%.
The White House has pursued other policies that lead to higher consumption, such as extending the student loan “pause,” which will lead some with college debt to spend their money on goods rather than on repaying their loans. The administration continues to push programs from the failed Build Back Better bill, such as subsidized childcare and universal pre-K, that also involve high new levels of government spending.