A slowdown in price gains delivered a second dose of welcome news for President Biden, who has spent months on the defensive about rapid inflation and his handling of the economy.
The moderation comes just two days after his party defied the kind of political blood bath that many had expected given voter concerns about the economy, including price gains that hit a 40-year high this summer. While control of Congress remained too close to call as of Thursday morning, Democrats lost far fewer seats in the midterms than party leaders had feared.
Mr. Biden took quick credit for the slowdown in the Consumer Price Index on Thursday, saying in a statement that his policies are helping to cool price gains while acknowledging there could be more struggles ahead.
“Today’s report shows that we are making progress on bringing inflation down, without giving up all of the progress we have made on economic growth and job creation,” he said. “My economic plan is showing results, and the American people can see that we are facing global economic challenges from a position of strength.”
He added that “it will take time to get inflation back to normal levels — and we could see setbacks along the way — but we will keep at it and help families with the cost of living.”
What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.
The latest data is likely to further cement Mr. Biden’s position that he does not need to change tack, even though Republicans may soon control one or both chambers of Congress.
At a news conference on Wednesday, Mr. Biden pointed to the election results as vindication of his economic policies and said he had no plans to shift his approach.
“The overwhelming majority of the American people support the elements of my economic agenda,” he said. “I’m confident these policies are working and that we’re on the right path, and we need to stick with them.”
Still, while price gains cooled somewhat, coming in at 7.7 percent, they remain uncomfortably high for consumers who continue to face higher costs for rent, food and other goods and services. Inflation is also well above the 2 percent average that the Federal Reserve aims for over time.
The latest data could give Fed officials some confidence that their policies are working, but they have made clear that they plan to keep raising interest rates and keep them elevated for some time. Their goal is to slow the economy by making it more expensive for people and businesses to borrow money, which in turn should reduce demand.
Understand Inflation and How It Affects You
Whether the Fed can pull that off without tipping the U.S. into recession remains to be seen.
Mr. Biden on Wednesday said he was “optimistic” that the Fed could avoid a recession, but acknowledged that the issue was largely out of his control.
“I am optimistic, because we continue to grow and at a rational pace, we’re not anywhere near a recession right now, in terms of the growth,” Mr. Biden said. “But I think we can have what most economists call a ‘soft landing.’ I’m convinced that we’re going to be able to gradually bring down prices so that they, in fact, end up with us not having to move into a recession to be able to get control of inflation.”
Republicans were quick to focus on the fact that while inflation is slowing, it is still painfully high and criticized Mr. Biden for not suggesting any type of economic pivot.
“With persistent and high inflation for the foreseeable future, American workers saw yet another pay cut in their real wages last month,” Representative Kevin Brady, Republican of Texas, said in a statement. “Housing prices for the past year have hit the highest in history, making President Biden’s promises of affordable housing another bitter pill for Americans hoping to buy their starter home.”
He added: “What will President Biden do differently to change his cruel economy in which so many Americans are struggling? His answer is ‘nothing.’ What a shame.”