President Biden on Wednesday again downplayed concerns about the recent burst of inflation, maintaining that surging consumers prices are temporary even as he cautioned that restaurants and other businesses in the hospitality sector could take longer to recover from the pandemic.
Though Biden acknowledged there will be "near-term inflation" as the economy reopens from the coronavirus pandemic, he said during a CNN town hall in Cincinnati that most economists believe "it’s highly unlikely that it’s going to be long-term inflation that’s going to get out of hand."
"The vast majority of the experts, including Wall Street, are suggesting that it’s highly unlikely that it’s going to be long-term inflation that’s going to get out of hand," Biden said. "There will be near-term inflation, because everything is now trying to be picked back up."
Still, the president acknowledged that businesses in the hospitality and tourism sector may be "in a bind for a while," amid a labor shortage that's seen workers gain more negotiating power for better wages and working conditions.
"It really is a matter of people deciding now that they have opportunities to do other things," he said. "People are looking to make more money and to bargain."
Higher-than-expected inflation has emerged as a new political liability for the Biden administration, with the government reporting last week that prices for goods and services in June jumped by the most in 13 years, fueling concerns that a rapidly rebounding economy could lead to runaway growth.
The Labor Department said in its monthly report that consumer prices rose 0.9% from May and 5.4% over the past year. Excluding volatile oil and gas prices, so-called core inflation jumped 4.5% over the past year, the largest increase since November 1991.
Republicans have latched onto the inflation issues, blaming the $1.9 trillion stimulus bill that Democrats passed without any GOP votes in March for the price spike and attacking the party for moving forward with another $4 trillion in new spending.
"This is a liberal wishlist," Sen. Lindsey Graham, R-S.C., said during a Wednesday press conference alongside five GOP senators. "And how does it add to inflation? Well, spending $3.5 trillion is not a good idea when you have an inflationary economy."
Democrats have largely downplayed concerns about the rising cost of goods and services and are pushing forward with their two-pronged economic plans: A bipartisan infrastructure bill that includes more than $500 billion in new spending and a $3.5 trillion spending plan that would dramatically expand the government-funded safety net.
Biden has claimed the government investments would curtail rising inflation – rather than inflame it.
"If we make prudent, multiyear investments in better roads, bridges, transit systems and high-speed internet, a modern resilient electric grid, here’s what will happen: It breaks up the bottlenecks in our economy," he said Monday. "These steps will enhance our productivity, raising wages without raising prices. That won’t increase inflation, it’ll take the pressure off of inflation."
The pickup in consumer prices has coincided with the economy's stronger-than-expected recovery from the pandemic as Americans, flush with stimulus cash, eagerly start spending again, splurging on everything from vacations to new clothing.
Federal Reserve Chairman Jerome Powell has also said he expects inflation to ease, blaming the increase on supply shortages and a wave of pent-up demand among consumers as more Americans are vaccinated and embark on their post-pandemic life. Though he's said inflation could turn out to be "higher and more persistent than we expect," Powell has maintained that it's likely transitory.