Can the Biden economy be underestimated? That’s the question economists are presumably asking themselves as newly released inflation numbers reveal the Biden economy has once again performed worse than predicted.
“The consumer price index increased 5.4% from a year earlier, the largest jump since August 2008, just before the worst of the financial crisis. Economists surveyed by Dow Jones had been expecting a 5% gain,” CNBC reported. “Stripping out volatile food and energy prices, the core CPI rose 4.5%, the sharpest move for that measure since September 1991 and well above the estimate of 3.8%. On a monthly basis, headline and core prices rose 0.9% against 0.5% estimates.”
This 13-year record was also broken in April and in May, both times being worse than economists predicted. The New York Times reported, “The Consumer Price Index surged 5 percent in May from a year earlier, the Labor Department said on Thursday. Economists had expected an increase of 4.7 percent. Prices rose 0.6 percent from April to May, and an index that excludes volatile food and energy costs rose 3.8 percent from a year earlier, the briskest pace since 1992.” In April, the rates were double the worst projection made in a Bloomberg survey of economists.
As forecasters have tried to incorporate the new Biden variable to their predictive formulas, they have progressively adjusted their inflation predictions. Data released on Monday by the Federal Reserve Bank of New York revealed that the June 2021 “Survey of Consumer Expectations” included the median one-year inflation expectations climbing to 4.8%, an increase of 0.8% from the previous month. The predictions have not only been increasing each month, they have been increasing exponentially. In January, February, March, April, May, and June, one-year expectations were respectively 3.0%, 3.1%, 3.2%, 3.4%, 4.0%, and 4.8%.