The Biden administration on Tuesday played defense before a much-anticipated reading on raging U.S. inflation, with officials holding a briefing for reporters and releasing a memo that they said “provides context for the upcoming CPI report.”
The report for the consumer price index is expected to show a year-over-year rise of 8.8% for June, according to economists polled by The Wall Street Journal.
The June CPI data “will largely not reflect the substantial declines in gas prices
we’ve seen since the middle of June,” because that data “captures the average price over the course of a month,” says the memo from two top White House economic officials, Brian Deese and Cecilia Rouse.
The memo also emphasizes that headline inflation in recent months has been “heavily driven” by Russia’s ongoing war in Ukraine, and it stresses that core inflation has “shown some signs of easing.”
The White House’s efforts on Tuesday come as analysts continue to predict defeats for Biden’s Democratic Party in November’s midterm elections if high prices persist.
Tuesday’s memo pushes back on growing chatter about the potential for a U.S. recession.
Last week’s strong jobs report and other data in recent months “are not consistent with a recession in the first or second quarter,” the missive says.
“While risks are elevated, the strength of the labor market — in addition to other factors like strong household balance sheets — puts the U.S. economy in a better position than many other countries to transition from an historic recovery to lower inflation and stable and steady growth.”
In addition, the memo from Deese and Rouse calls for Congress to provided needed approvals for President Joe Biden’s priorities.
It says: “The best thing Congress can do to improve our chances of accelerating price normalization and successfully transitioning to stable, steady growth is topass legislation that lowers costs for families — from prescription drugs to utility costs — while reducing the federal budget deficit, in addition to passing the Bipartisan Innovation Act.”
During the briefing for reporters, a senior administration official noted that the average gasoline price in June was $4.92 a gallon, up about 10% from its May average level of $4.48, and that should deliver a rise of about 50 basis points in month-over-month headline inflation.
But gas prices have been falling since June 14 to around $4.66 or $4.68 — and wholesale gas futures imply retail prices could fall another 50 cents or so, the official said. So that elevated price in June is both out of date to where the market is today, and out of date to what American consumers are actually experiencing, according to the official.