“We think the likeliest outlook over the next several months is for inflation to rise modestly,” two officials at Mr. Biden’s Council of Economic Advisers, Jared Bernstein and Ernie Tedeschi, wrote on Monday in a blog post outlining some of the administration’s thinking. “We will, however, carefully monitor both actual price changes and inflation expectations for any signs of unexpected price pressures that might arise as America leaves the pandemic behind and enters the next economic expansion.”
Some Republicans call that posture dangerous. Senator Rick Scott of Florida, the chairman of his party’s campaign arm for the 2022 midterm elections, has called on Mr. Biden and Mr. Powell to present plans to fight inflation now.
“The president’s refusal to address this critical issue has a direct negative effect on Floridians and families across our nation, and hurts low- and fixed-income Americans the most,” Mr. Scott said in a news release last week. “It’s time for Biden to wake up from his liberal dream and realize that reckless spending has consequences, inflation is real and America’s debt crisis is growing. Inflation is rising and Americans deserve answers from Biden now.”
Economic teams in recent administrations spent little time worrying about inflation, because inflationary pressures have been tame for decades. It has fallen short of the Fed’s average target of 2 percent for 10 of the last 12 years, topping out at 2.5 percent in the midst of the longest economic expansion in history.
Shortly before the pandemic recession hit the United States in 2020, President Donald J. Trump’s economic team wrote that “price inflation remains low and stable” even with unemployment below 4 percent. As the economy struggled to climb out from the 2008 financial crisis under President Barack Obama, White House aides feared that prices might fall, instead of rise.
“Given the economic crisis, we worried about preventing deflation rather than inflation,” said Austan Goolsbee, a chairman of the Council of Economic Advisers during Mr. Obama’s first term.
The conversation has changed given the large amounts of money that the federal government is channeling into the economy, first under Mr. Trump and now under Mr. Biden. Since the pandemic took hold, Congress has approved more than $5 trillion in spending, including direct checks to individuals.