The Biden administration on Tuesday played defense before Wednesday’s much-anticipated reading on raging U.S. inflation, with officials holding a briefing for reporters and releasing a memo that they said “provides context for the upcoming CPI report.”
The June CPI data “will largely not reflect the substantial declines in gas prices
RB00,
we’ve seen since the middle of June,” because that data “captures the average price over the course of a month,” said the memo from two top White House economic officials, Brian Deese and Cecilia Rouse.
Related: Enjoy the dip in gasoline prices because it may not last
The memo also emphasized that headline inflation in recent months has been “heavily driven” by Russia’s ongoing war in Ukraine, and it stresses that core inflation has “shown some signs of easing.”
See: Core rate of PCE inflation slows
The White House’s efforts on Tuesday came as analysts continue to predict defeats for Biden’s Democratic Party in November’s midterm elections if high prices persist.
On Wednesday, the report for the consumer price index showed a year-over-year rise of 9.1% for June, topping forecasts.
Read more: Biden claims inflation is lower in the U.S. than abroad. Here’s the truth.
Tuesday’s memo pushed back on growing chatter about the potential for a U.S. recession.
Last week’s strong jobs report and other data in recent months “are not consistent with a recession in the first or second quarter,” the missive said.
“While risks are elevated, the strength of the labor market — in addition to other factors like strong household balance sheets — puts the U.S. economy in a better position than many other countries to transition from an historic recovery to lower inflation and stable and steady growth.”
In addition, the memo from Deese and Rouse called for Congress to provided needed approvals for President Joe Biden’s priorities.
It said: “The best thing Congress can do to improve our chances of accelerating price normalization and successfully transitioning to stable, steady growth is to
pass legislation that lowers costs for families — from prescription drugs to utility costs — while reducing the federal budget deficit, in addition to passing the Bipartisan Innovation Act.”
During the briefing for reporters, a senior administration official noted that the average gasoline price in June was $4.92 a gallon, up about 10% from its May average level of $4.48, and that should deliver a rise of about 50 basis points in month-over-month headline inflation.
But gas prices have been falling since June 14 to around $4.66 or $4.68 — and wholesale gas futures imply retail prices could fall another 50 cents or so, the official said. So that elevated price in June is both out of date to where the market is today, and out of date to what American consumers are actually experiencing, according to the official.
The main U.S. stock gauges
SPX,
COMP,
closed with losses Tuesday, and stock futures
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traded sharply lower on Wednesday following the CPI release.
This is an updated version of a report first published on July 12, 2022.
