Joe Biden gets some good news on inflation, but challenges remain

President Joe Biden’s reelection campaign has touted “Bidenomics” for producing lower inflation and near-record lows in unemployment. So, Biden took a victory lap when the data came out July 12 showing that inflation has continued to drop.

“Good jobs and lower costs: That’s Bidenomics in action,” Biden said in a statement. 

In June 2023, the closely watched consumer price index — a basket of consumer goods for which the government tracks prices monthly — notched its smallest increase in a year. The June 2023 rate rose 3% from a year earlier, far below its 9% peak a year ago. 

Since that peak, inflation has fallen for 12 straight months. Inflation in June was the lowest it’s been since March 2021, just two months into Biden’s presidency. 

Despite the data, some Republicans remained unimpressed. 

“Biden can spew his “Bidenomics” drivel all he wants, but when I talk to people, no one is happy with the state of the economy right now,” tweeted Rep. Lauren Boebert, R-Colo. “Inflation is still out of control.”

No one knows inflation’s future course, but it’s inaccurate to say inflation is “out of control.” 

Rather, it’s still higher than the Federal Reserve’s target rate of 2%, which means the Fed could keep raising interest rates to bring inflation down further. Although higher interest rates would likely cool inflation further, it could also hasten a recession and raise mortgage and credit card costs for borrowers.

Inflation and wages under Biden

In his statement, Biden said inflation-adjusted wages “for the average American worker are now higher than they were before the pandemic.”

This is accurate, though not by much. In 2019’s fourth quarter, the last full quarter before the pandemic’s onset in early 2020, median usual weekly earnings for full-time workers 16 and older were $362, adjusted for inflation. The figure for the most recent period, the 2023 first quarter, was $1 more, or $363.

Another way to look at inflation’s relationship to wages is to compare year-over-year inflation with year-over-year wages. Doing this requires using a different wage measurement that is tallied monthly: average hourly earnings for private employees.

For the past two months — May and June 2023 — wages have risen faster compared with a year earlier than inflation has. The last time that happened was during the first few months of Biden’s presidency; for most of Biden’s time in office, inflation has outpaced wages.

Despite this increase, inflation-adjusted wages have a substantial hole to climb out of.

The consumer price index in June was almost 1.16 times higher than it was in January 2019, when Biden took office. That increase outpaced the increase for wages over the same period; wages are now 1.12 times higher than in January 2019.

The wider the gap between cumulative inflation and cumulative wage increases, the greater the economic pinch for the public. Whether the  gap between inflation and wages can narrow over the next 16 months — and make Americans feel as good about the economy as it looks on paper — remains a key question for Biden’s chances in the 2024 election.

PolitiFact Staff Writer Nuria Diaz Muñoz contributed to this article.