“We should be on our way to a fantastic American comeback summer, full speed ahead,” said Senator Mitch McConnell of Kentucky, the Republican leader, on the chamber floor this month. “From vaccinations to job growth, the new Biden administration has inherited favorable trends in all directions.”
“But in several ways, the choices made by the Democratic elected have helped slow the return to normal,” he added.
Critics have also questioned the wisdom of the Fed’s commitment to keeping interest rates low and buying bonds even as prices begin to rise. Pennsylvania Republican Senator Patrick J. Toomey said last month that while the Fed “claims this inflation spurt will be mild and temporary,” it “may be time for the central bank to consider the alternative.”
Mr Biden’s advisors say they continue to monitor the risk of consumer prices rising, forcing a swift policy response that could curb economic growth. They say these risks remain small and that they see no reason to change course on the president’s agenda, including the proposed infrastructure and social programs that the president claims will prop the economy for years to come. That agenda could prove to be tougher, even among Congress Democrats, if employment growth continues to disappoint and inflation rises higher than expected.
Fed officials also remain intrepid. They show no signs of a rate hike anytime soon and continue to buy $ 120 billion worth of government bonds every month. Officials have only given the earliest indications that they may tip toe off this emergency policy. They argue that their job is to manage risk and the risk of early aid withdrawal is greater than the risk of the economy overheating.
“I don’t think it would be good for the industries we believe will be successful if the recovery continues so that we can complete this recovery early,” said Randal K. Quarles, Fed vice chairman of oversight, at a hearing of the House of Representatives committee this week when lawmakers pushed it on looming inflation. The Fed is independent from the White House but is responsible for keeping prices in check.
The voters give Mr. Biden good marks for his previous economic responsibility. A solid majority of Americans – including many Republicans – support the president’s plans to levy taxes on high wage earners and businesses to fund new spending on water pipes, electric vehicles, education, childcare, paid vacations, and other programs Conducted by online research company Survey Monkey through May 9th.
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