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Biden Claims The U.S. Saw Zero Inflation In July. Here Are The Real Numbers:

John Galt

Updated: August 11, 2022

Inflation CPI
Editor’s Note:

EDITOR'S NOTE: President Biden’s victory lap over yesterday’s CPI inflation (July) “miss” was nothing short of a political gamble; the risk, of course, is that it may have been ill-timed; jumping the gun with an outlook that’s far from being well-informed. Apparently, Biden isn’t aware of this; otherwise, he would have thought the better of it. The headline CPI figure may have seemed promising to those perma-bulls hoping to see a peak in rising costs. But if you look closely at the details, you’ll see that many segments, most importantly food, continue to rise. Former President Clinton's Treasury Secretary, Larry Summers, is right in saying that “we still have a very serious problem.” Indeed, we do; and it’s not going away anytime soon. As for Biden’s Inflation Reduction Act, its title overpromises what it might be able to deliver; its name denotes one thing, but if you read between the lines, it connotes “political propaganda with effects other than the ones intended.” In short, American households are not likely to see much relief anytime soon. Hopefully, you’ve taken steps to hedge your purchasing power.

  • Consumer prices jumped 8.5 percent in July compared with a year earlier, the government said Wednesday
  • On a monthly basis, prices were unchanged from June to July, the smallest increase for more than two years
  • However, prices are spiking across a wide variety of goods and services - leaving most Americans worse off
  • Paychecks are rising faster than in decades but not enough to keep up with costs for items like food and rent
  • Wall Street immediately reacted to the update, with the Dow Jones, S&P 500 and the Nasdaq all surging today

Joe Biden today repeatedly claimed the US saw 'zero inflation' in July - despite it actually remaining high at 8.5 percent following a 40-year spike in June.

The President told a press conference he reached the figure because the price of some products went up while the cost of others went down by the same amount.

The 79-year-old suggested it meant there was 'zero percent inflation in the month of July' but admitted many Americans were 'still hurting' from the crippling cost of living crisis.

His latest claim comes just two weeks after Biden refused to admit the US was in a recession - despite economists' warnings - and pushed the idea he was responsible for growth in the economy.

The government on Wednesday released the consumer price report showing inflation hit 8.5 percent for the month of July - down from 9.1 percent in June.

On a monthly basis, prices were unchanged from June to July, the smallest such rise for more than two years. Still, prices are spiking across a wide range of goods and services, leaving most Americans worse off.

Average paychecks are rising faster than they have in decades - but not fast enough to keep up with accelerating costs for such items as food, rent, autos and medical services.

Falling gas prices were credited for last month's relative decline from June, but this was driven partly by fewer Americans heading to the pumps or filling up less often.

Biden has pointed to the declining gas prices as a sign his policies - including large releases of oil from the nation's strategic reserve - are helping lessen the higher costs.

But Republicans are stressing the persistence of high inflation as a top issue in the midterm congressional elections, with polls showing elevated prices have driven Biden's approval ratings down sharply.

On Friday, the House is poised to give final congressional approval to a revived tax-and-climate package pushed by Biden and Democratic lawmakers.

Economists say the measure, which its proponents titled the Inflation Reduction Act, will have only a minimal effect on inflation over the next several years.

Elsewhere in inflation updates today:

  • Wall Street immediately reacted to the update, with the Dow Jones, S&P 500 and the Nasdaq all surging;
  • The dollar fell by more than one percent on Wednesday following the cooler-than-expected inflation report;
  • Oil shipments from Russia through a critical pipeline to several European countries are expected to resume;
  • Traders slashed bets the Fed will deliver a third straight 75-basis-point interest rate increase in September;
  • US Treasury benchmark 10-year note yields fell to 2.69 percent from around 2.81 percent before the data. 

(Source: Daily Mail)

(Source: Daily Mail)

(Source: Daily Mail)

(Source: Daily Mail)

(Source: Daily Mail)

Falling gas prices (pictured) gave Americans a slight break from the pain of rocketing inflation last month, though the surge in overall prices slowed only modestly from the four-decade high it reached in June

(Source: Daily Mail)

Falling gas prices (pictured) gave Americans a slight break from the pain of rocketing inflation last month, though the surge in overall prices slowed only modestly from the four-decade high it reached in June

Biden made his inflation comments ahead of signing a bill expanding healthcare resources for veterans exposed to toxic chemicals on Wednesday morning.

He said: 'I just want to say a number. Zero. Today we received news that our economy had zero percent inflation... in the month of July. Zero percent.

'Here's what that means. While the price of some things went up last month, the price of other things went down by the same amount.

'The result: zero inflation last month. But people are still hurting. But zero inflation last month. Economists look at a measure of inflation that ignores food and energy prices and they call it core inflation.

'That's about the lowest amount in seven years... several months. When you couple that with last week's booming jobs report of 528,000 jobs created last month and 3.5 percent unemployment it underscores the kind of economy we've been building.

'We're seeing a stronger labor market where jobs are booming and Americans are working and we're seeing some signs that inflation may be beginning to moderate.

'That's what happens when you build an economy from the bottom up and the middle out. The wealthy do very well and everyone has a chance. It gives everyone a chance to make progress.'

Biden was referring to core inflation, which is the increase in the average cost of goods excluding energy and food - two of the more volatile segments of the consumer price index.

He later appeared to hedge his celebration by warning of the 'global challenges' that still remain, including Russia's brutal invasion of Ukraine and the lingering supply chain effects from the pandemic.

He said: 'We could face additional headwinds in the months of head. Our work is far from over but two things should be clear: first, the economic plan is working.'

Biden also urged the House of Representatives to pass the Inflation Reduction Act, the $740 billion climate change, healthcare and economic package that passed the Senate 51 to 50 on Sunday. He called it 'the most consequential thing that Congress can do to keep our progress on inflation… from getting worse, keep it moving in the right direction.'

Senator Ted Cruz said: 'Ridiculous BS from the White House. There's 8.5% inflation and basically everything anyone ever buys went up in price. This is just cruel gaslighting from the Biden admin.'

GOP leader Kevin McCarthy said: 'Democrats want you to be complacent w/ 13% inflation since Biden took office. But here's the truth: it's still at a 40-year high.

'They have no plan to end this new normal—the spending scam they're jamming will only make things worse. America can't afford Dem policies anymore!'

GOP chairman Ronna McDaniel said: 'The July inflation report shows Biden's Great American Pay Cut continues. Real wages have fallen and sky-high prices are still rising. The last thing we need are Dems' middle class tax increases!'

Wall Street rose sharply when it opened on Wednesday after the July data was released, with the Dow Jones spiking by 356.22 points, or 1.09 percent, at the open to 33,130.63.

The S&P 500 opened higher by 58.55 points, or 1.42 percent, at 4,181.02, while the Nasdaq gained 299.51 points, or 2.40 percent, to 12,793.44 at the opening bell.

(Source: Daily Mail)

(Source: Daily Mail)

The dollar fell more than 1 percent following the cooler-than-expected inflation report for July that raised expectations of a less aggressive rate hike cycle than previously anticipated from the US Federal Reserve.

The dollar index, which measures the currency's value against a basket of currencies, was down 1.128 percent at 105.15 at 9.00am ET.

'This is good news for FX traders, as it was a pretty clear reaction and you will probably see that there still should be some follow-through,' said Edward Moya, senior market analyst at Oanda.

'They will be debating whether it´s a half-point increase, or 75 (basis points), but I think the risk of much more aggressive tightening is now off the table,' said Moya.

The euro climbed 1.1 percent to $1.0325, sterling gained 1.17 percent to $1.2216, and the dollar also lost 1.12 percent on the Swiss franc, which traded at 0.9428 per greenback.

The greenback gained 1.38 percent versus the Japanese yen to 133.2 yen.

While there are signs inflation may ease in the coming months, it will likely remain far above the Federal Reserve's 2 percent annual target well into next year or even into 2024.

Chair Jerome Powell said the Fed needs to see a series of declining monthly core inflation readings before it would consider pausing its rate hikes.

The Fed raised its benchmark short-term rate at its past four rate-setting meetings, including a three-quarter point hike in both June and July - the first increases that large since 1994.

Traders slashed bets the Fed will deliver a third straight 75-basis-point interest rate increase in September after the latest data was released. Traders of futures tied to the Fed's policy rate sent the contracts soaring.

Prices after the report show traders now expect the Fed to raise rates by 50 basis points next month, not the 75 basis points priced in before the CPI report. The Fed's current policy rate target is now 2.25 percent-2.5 percent.

It comes after a blockbuster jobs report for July the government issued Friday - with 528,000 jobs added, rising wages and an unemployment rate that matched a half-century low of 3.5 percent - solidified expectations the Fed will announce yet another three-quarter-point hike when it next meets in September.

Robust hiring tends to fuel inflation because it gives Americans more collective spending power.

One positive sign is Americans' expectations for future inflation have fallen, according to a survey by the Federal Reserve Bank of New York, likely reflecting the drop in gas prices that is highly visible to most consumers.

Inflation expectations can be self-fulfilling - if people believe inflation will stay high or worsen, they´re likely to take steps - such as demanding higher pay - that can send prices higher in a self-perpetuating cycle.

Companies then often raise prices to offset higher their higher labor costs. But the New York Fed survey found that Americans´ foresee lower inflation one, three and five years from now than they did a month ago.

Supply chain snarls are also loosening, with fewer ships moored off Southern California ports and shipping costs declining. Prices for commodities like corn, wheat and copper have fallen steeply.

Yet in categories where price changes are stickier, such as rents, costs are still surging.

One-third of Americans rent their homes, and higher rental costs are leaving many of them with less money to spend on other items.

Data from Bank of America, based on its customer accounts, shows that rent increases have fallen particularly hard on younger Americans.

Average rent payments for so-called Generation Z renters jumped 16 percent in July from a year ago, while for baby boomers the increase was just 3 percent.

Stubborn inflation isn´t just a US phenomenon. Prices have jumped in the United Kingdom, Europe and in less developed nations such as Argentina.

In the United Kingdom, inflation soared 9.4 percent in June from a year earlier, a four-decade high.

In the 19 countries that use the euro currency, it reached 8.9 percent in June compared with a year earlier, the highest since record-keeping for the euro began.

But in further hope economies may be able to bounce back, oil shipments from Russia through a critical pipeline to European countries are expected to resume soon after a problem over payments for transit was resolved. 

'I expect the oil shipments to resume in hours,' Slovakia´s Economy Minister Richard Sulik said.

Russian state pipeline operator Transneft said Tuesday it halted shipments through the southern branch of the Druzhba, or Friendship, pipeline, which runs through Ukraine to the Czech Republic, Slovakia and Hungary.

The northern leg of the Druzhba pipeline, which runs through Belarus to Poland and Germany, was unaffected, Transneft said.

Transneft cited complications due to European Union sanctions for its action on August 4, saying its payment to the company´s Ukrainian counterpart was refused.

Sulik said the payments would be made Wednesday by Slovak refiner Slovnaft after both the Russian and Ukrainian sides agreed to the solution.

Slovnaft is owned by Hungary´s MOL energy group. MOL confirmed the money has been transferred. 

Biden's main plan to tackle the inflation crisis - which some have dubbed Bidenflation - that is crippling the US is outlined in the Inflation Reduction Act.

The Senate passed the bill , a climate change and healthcare spending bill that has been the result of months-long talks within the Democratic Party, on Sunday.

No Republican lawmakers signed on to the act, though Senate Democrats were able to pass it via a simple majority through the budget reconciliation process.

It is a major win for Democrats' agenda, whose prospects in the looming midterm elections had looked dim for months.

However, conservatives criticized the move, alleging Democrats were 'reckless' by passing the bill as the US battles a 41-year high inflation rate and looming recession.

Republicans further accused Democrats of misleading the American public with the legislation's name, claiming it won't help sky-high inflation and citing a study that says it could increase taxes on every income bracket.

The Inflation Reduction Act of 2022 passed 50-50 with an amendment by GOP Senator John Thune - who did not vote for the final package

The Inflation Reduction Act of 2022 passed 50-50 with an amendment by GOP Senator John Thune - who did not vote for the final package. (Source: Daily Mail)

Sen. Marsha Blackburn of Tennessee claimed the bill increases taxes and decreases energy production ahead of what analysts say is an inevitable recession.

'The Democrats' reckless tax and spending plan includes nearly $370 billion to fund the Green New Deal, $64 billion for Obamacare, and hundreds of billions in new taxes on American businesses and manufacturers,' Blackburn penned in a heated Twitter rant.

'The spending spree also includes $80 billion to double the number of IRS agents — practically giving every American a personalized tax auditor. We should be cutting taxes, not increasing them.'

'It is a shame that Senate Democrats have forced through a socialist agenda that will make life more difficult and expensive for Tennesseans,' she added.

Sen. Rick Scott of Florida called the bill a 'war on seniors' during an interview on CBS News' Face The Nation and claimed it would raise Medicare costs.

'Right now, this bill actually ought to be called the war on seniors act. I mean, this is a war on Medicare. If you look at this. This is a $280 billion cut in Medicare,' Scott said.

Sen. Ted Cruz of Texas compared the bill to a 'give-away to the Democrats' radical leftist base at the expense of middle-class Americans.'

Sen. John Kennedy of Louisiana called raising taxes during both a recession and inflation 'a special kind of stupid.'

Ronna McDaniel, chairwoman of the Republican National Committee, warned: 'Democrats will pay the price in November for raising taxes on families during a recession.'

Source: Daily Mail

inflation in july

Source: Daily Mail

inflation in july

Source: Daily Mail

inflation in july

Source: Daily Mail

The GOP blasted progressive leadership over the $740 billion climate change and healthcare spending bill that has been the result of months-long talks within the Democratic Party to combat inflation in july

Source: Daily Mail

Vice President Kamala Harris cast the tie-breaking vote in the evenly divided chamber as Democrats erupted into applause at the end of their 16-hour session.

A visibly emotional Senate Majority Leader Chuck Schumer took to the Senate floor to thank everyone from Congressional staffers to the Capitol cafeteria workers for aiding the effort, telling them: 'You'll tell your grandchildren you were here.'

Lawmakers had been debating the package since 11 p.m. on Saturday, and continued into late afternoon on Sunday without stopping.

President Joe Biden lauded its passage in a statement and called on the House of Representatives to approve it as well - after which he can sign it into law.

'Today, Senate Democrats sided with American families over special interests, voting to lower the cost of prescription drugs, health insurance, and everyday energy costs and reduce the deficit, while making the wealthiest corporations finally pay their fair share,' Biden said.

'I ran for President promising to make government work for working families again, and that is what this bill does - period.'

Meanwhile Democrat Sen. Chris Coons of Connecticut admitted on ABC News' This Week that the bill could take 'a year or more' to cut inflation. 

'But, look...we've seen gas prices come down week after week after week for the last five weeks in a row,' Coons defended. 

'Yes, inflation is higher than it should be, but we just got a robust jobs number, more than 500,000 jobs created in this past month. Unemployment's the lowest it's been in my lifetime. And I think we've got a strong economy, a strong recovery underway.'

The climate change and healthcare bill, which includes roughly $433 billion in new spending, was hatched out in secretive talks between Senate Majority Leader Chuck Schumer and West Virginia Democrat Sen. Joe Manchin.

The final bill passed with an amendment by Senate GOP Whip John Thune that would make exceptions to the 15 percent minimum corporate tax rate. 

A visibly emotional Chuck Schumer thanked everyone from his staff to the US Capitol cafeteria workers after the marathon effort inflation in july

A visibly emotional Chuck Schumer thanked everyone from his staff to the US Capitol cafeteria workers after the marathon effort. (Source: Daily Mail)

inflation in july Vice President Kamala Harris cast the tie-breaking vote in the evenly divided Senat

Vice President Kamala Harris cast the tie-breaking vote in the evenly divided Senate. (Source: Daily Mail)

'Just successfully blocked Democrat leadership's attempt to sneak a tax hike on already struggling small businesses into their reckless tax-and-spending bill,' Thune wrote online after his amendment was approved in a 57 to 43 vote.

Earlier on Sunday, Senate Republicans had successfully forced Democrats to remove a provision in their package that would have capped the price of insulin for all Americans at just $35.

Senators have been inside the US Capitol from Saturday night through Sunday morning voting on dozens of amendments to Democrats' spending bill, in a lengthy process known as a vote-a-rama.

Democrats had left the insulin cap in the bill despite the Senate parliamentarian ruling that it violates rules of the budget reconciliation process by which the legislation is being passed. 

Republicans raised a point-of-order on Sunday, forcing a floor-wide vote on whether to overrule the parliamentarian. 

The measure ultimately fell three votes short of the 60-vote threshold needed. Forty-three lawmakers voted to strike the price cap down.

'3 GOP votes is all it took to cap insulin at $35,' Progressive Rep. Ruben Gallego wrote on Twitter, lamenting the defeat.

'The sad part is the GOP could have voted yes on this amendment and voted no on the whole bill and people would have affordable insulin. But let's be honest they just wanted to be assholes.'

But GOP Senator Ron Johnson of Wisconsin accused Democrats of legislative trickery by deliberately defying the Senate parliamentarian.

'Lying Dems and their friends in corporate media are at it again, distorting a Democrat 'gotcha' vote,' Johnson stated.

'In reality, the Dems wanted to break Senate rules to pass insulin pricing cap instead of going through regular order. They put this in a bill it wasn't allowed in, all for show.'

The seven Republican senators who voted to keep the insulin cap are: Susan Collins, Josh Hawley, Cindy Hyde-Smith, John Kennedy, Bill Cassidy, Lisa Murkowski and Dan Sullivan.

'Republicans just blocked us from capping the price of insulin for all Americans at $35 a month,' Democrat Senator Kirsten Gillibrand wrote on Twitter. 'We've already seen far too many people risk their lives and health by rationing insulin they can't afford. It's unconscionable that we're letting this tragedy continue.'

The package contains roughly $740 billion in new revenue proposals and $433 billion in new spending.

It includes more funding for IRS enforcement, a 15 percent minimum corporate tax, and empowers Medicare to negotiate for lower drug costs.  

The package also marks $369 billion for energy security and climate change and $64 billion to extend health care subsidies for the Affordable Care Act.

It leaves $300 billion to reduce the deficit. 

Despite Democrat loses on insulin prices and the corporate minimum tax, the bill largely withstood Republican attempts at carving out amendments for border security, crime, domestic fossil fuel production and other GOP-led issues.

Originally published on Daily Mail.

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