A supermarket in Glendale, California, January 12, 2022 (AFP / Robyn Beck)
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Joe Biden points to global supply difficulties to explain high inflation in the United States, but the trillions of dollars injected into the economy also explain why prices have risen more there than elsewhere.
“Inflation is entirely due to the supply chain,” said the American president on Wednesday during his press conference.
Factories around the world have been disrupted by Covid-19, which has derailed transport, causing shortages and delays driving up prices.
In the United States, inflation will reach 7% in 2021, a rate the country has not seen for nearly 40 years.
The Republican opposition accuses Joe Biden of having caused such a surge in prices with overly broad stimulus plans and spending. She now denounces “Bidenflation”.
“To find the roots of current inflation, we would have to go back,” lamented Stephanie Bice, Republican elected to the House of Representatives, Wednesday during a round table on the subject.
“Last year, the glut of federal dollars that was pumped into our economy fueled the price spike,” she said.
In the line of sight, the emergency plan of 1,900 billion dollars that Democratic President Joe Biden had adopted in March 2021, just after his arrival at the White House. Republicans strongly opposed it.
For the Democratic administration, however, these expenses have prevented the world’s largest economy from sinking, and have made it possible to limit inequalities.
Its Treasury Secretary, Janet Yellen, thus, on Thursday on the CNBC channel, spoke of “all the bad things (…) that could have happened without the interventions that we made with the American recovery plan”, like “ persistently high unemployment or worsening child poverty.
It also deemed it possible to bring inflation back to around 2% by the end of 2022.
– Paved in the pond –
For some economists, this aid was necessary, but could have been less broad and more targeted.
“In my opinion, last year a bailout package was much needed but it should have been smaller,” Jason Furman, a Harvard economics professor and former White House economic adviser, told AFP. under Barack Obama.
“With hindsight, instead of being $2 trillion, it could have been just $1 trillion,” he added.
Chart showing US inflation since 2001 (AFP/)
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At the time, another Democratic economist, Larry Summers, had thrown a stone into the pond by warning that this plan, although “admirably ambitious”, could trigger “inflationary pressures not seen for a generation”.
Bill Clinton’s former Treasury secretary and Barack Obama’s main economic adviser had spoken of a risk of overheating, economic growth out of control, with demand so strong that supply no longer follows, causing price increases.
The eurozone also saw prices rise, but only 5%, according to Eurostat data released on Thursday.
“The United States and Europe are facing the same inflationary pressures around oil prices, the global supply chain and other effects of the pandemic,” according to Jason Furman.
But “the United States has done much more to give money to households, which has led to both faster GDP growth in the United States and higher inflation.”
– “Direct consequence” –
“Inflation in the United States is, to some extent, a direct consequence of income support, combined with rigid or disrupted supply,” OECD chief economist Laurence Boone said Monday. a meeting of the Eurogroup.
US President Joe Biden during a press conference at the White House on January 19, 2022 in Washington (AFP / MANDEL NGAN)
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On the other hand, “the main driver of inflation in the euro zone is the price of energy”.
According to her, this is due to the differences in policy on both sides of the Atlantic from the start of the Covid-19 crisis: Europe has sought to keep employees in office despite the paralysis of activity, when the United States allowed companies to lay off workers, then distributed financial aid to households.
In one year, between March 2020 and March 2021, some 5,000 billion dollars, more than the GDP of Germany, were paid to small businesses, but also to households.
Checks and direct payments, generous unemployment benefits, tax credits for families with children, have thus come to swell the bank accounts of Americans and have enabled the world’s largest economy to maintain the functioning of its economic engine, consumption.
jul / dax
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