Rising inflation and political risks for administration

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Rising inflation is a big worry for many nations, including the US. With people yet to recover from the ill effects of Covid pandemic, even the slightest changes in economic activity could adversely affect their livelihood.

Top economists in America have already expressed serious concerns over the rising inflation and they felt it has the potential to stall the economy’s recovery from recession. If the economy is not showing growth, it means the ruling governments will have to face the wrath of the people.

The Biden administration officials seemed to have overestimated the spending trends of Americans. They thought the availability of vaccines would activate the spending habits of the people.

However, their calculations were wrong, especially after the emergence of the delta variant of the virus. It once again slowed economic activities. Instead of spending outside, Americans preferred to sit at home and spend online. They used e-commerce platforms for buying groceries and other items. It also led to an increase in prices for almost all products.

“Because of the strength of our economic recovery, American families have been able to buy more products. They’re not going out to dinner and lunch and going to the local bars because of COVID. So what are they doing? They’re staying home, they’re ordering online, and they’re buying product.”

The rise in inflation must have hurt the popularity of as Biden’s poll numbers are not encouraging.

Prices rose 6.2% in October from the year before in the US.

Republicans chose the occasion to blame the price increases on the aid package that Biden signed in the spring. With Fed Chair Jerome Powell reappointed for a second term, Biden can expect the Fed to avoid quick increases in interest rates soon. The administration also spent money offering stimulus packages to distress people.

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