The Federal Reserve increased targets for the federal funds rate by 0.75% on Wednesday afternoon, sending the Dow, which tracks 30 of the most prominent companies on American stock exchanges, tumbling more than 500 points. After stagnating on Thursday, the index fell down another 500 points by early Friday afternoon to 29,400.
On January 20, 2021, the day of Biden’s inauguration, the Dow closed slightly above 30,900.
Indeed, the United States economy has struggled over the past two years under a variety of economic disruptions — including labor shortages, supply chain bottlenecks, and the Russian invasion of Ukraine — all of which have contributed to soaring inflationary pressures. Price levels between August 2021 and August 2022 rose 8.3%, according to data from the Bureau of Labor Statistics, marking a slight moderation from an 8.5% year-over-year increase in July and a 9.1% year-over-year increase in June.
Biden garnered criticism for celebrating the Inflation Reduction Act upon the most recent price level news, which led the Dow to drop nearly 1,300 points. The commander-in-chief said that the bill was the “single most important legislation passed in the Congress to combat inflation and one of the most significant laws in our nation’s history.”
Despite the recent moderation in year-over-year inflation, month-over-month prices for food, shelter, and medical services ticked upward, while core inflation — a metric that excludes food and energy, which tend to be more volatile — continued to rise. Throughout much of the year, however, energy prices have been a particularly salient factor behind higher costs as tensions in Europe placed upward pressure on prices. The Biden administration has also leased less federal land at this point for drilling than any of his predecessors since the end of World War II.
The national average price of gasoline was $2.38 per gallon when Biden assumed office and increased to $3.53 per gallon by the start of the Russian invasion. After surpassing $5.00 per gallon in early June, prices have somewhat subsided to $3.70 per gallon as of Friday, according to data from AAA.
Nevertheless, the White House claimed credit for the recent plateau in costs. “President Biden is committed to tackling these immediate challenges, without giving up the substantial economic and labor market gains our economy has achieved,” an economic report from the White House said. “And we are seeing significant progress on that front, with a decline of more than $1.20 in gas prices this summer and overall prices in the economy declining moderately in July.”
Economic issues are especially salient as Americans prepare to vote in the midterm elections. In the swing state of Pennsylvania, for instance, voters disapprove of Biden by a 54% to 39% margin, according to a poll from USA Today Network and Suffolk University. The percentage of Pennsylvanians characterizing economic conditions as “poor” quadrupled from 12% to 45% over the past four years, while only 1% of voters described the economy as “excellent.”
More than half of the electorate says they “want their vote in November to change the direction in which Biden is leading the nation,” according to Suffolk.