President Biden met with Jerome H. Powell, the Federal Reserve chair, at the White House on Tuesday, as part of an effort to both sell Americans on a brightening view of the economy and reassure consumers that leaders in Washington are hard at work to slow rapidly rising prices.
White House officials cast the visit as a chance for Mr. Biden, who nominated Mr. Powell for a second term as Fed chair late last year, to congratulate him on his recent Senate confirmation. It was also the start of a monthlong attempt to convince the public that inflation is coming under control and that the economy is performing far better than Mr. Biden’s polling numbers would suggest.
Speaking to reporters at the start of the meeting, which also included Treasury Secretary Janet L. Yellen, a former Fed chair, Mr. Biden reiterated that fighting inflation was his top economic priority and that he would not interfere with the Fed as it tried to tame rising prices.
That fight, Mr. Biden said, “starts with a simple proposition: Respect the Fed, respect the Fed’s independence, which I have done and will continue to do.”
The president added that Mr. Powell “and other members of the Fed have noted at this moment they have been laser focused on addressing inflation like I am.”
The Fed has begun raising interest rates to slow down the economy, hoping that reining in consumer demand will eventually help bring price increases under control.
Understand Inflation and How It Impacts You
But while the central bank may help cool down the economy to a more sustainable path over time, the Fed’s moves are likely to hurt in the near term: Rate increases are making it more expensive for households and businesses to borrow money to fund big purchases, and they work to counteract inflation partly by slowing down hiring and wage growth.
Mr. Biden’s push to slow inflation, with the Fed leading the charge, puts Mr. Powell in a potentially awkward position. The president has repeatedly said that he respects the Fed’s independence to set monetary policy and that he will not cajole the central bank to change interest rates, as his predecessor, former President Donald J. Trump, loved to do. But Mr. Biden has also made clear that he expects the Fed to tame inflation without plunging the economy into a recession, a combination that could be difficult for Mr. Powell to pull off.
Inflation in the United States is running near its fastest pace in four decades, with prices rising for gas, food and rent. While price pressures have shown early signs of abating, it is unclear how large and sustainable that decline will be, given kinks in global supply chains and Russia’s war in Ukraine.
Americans have become pessimistic about the economy and their own financial prospects as their paychecks have failed to keep up with inflation. The squeeze hitting consumers comes at a tough time for the White House and Democrats, as the November midterm elections approach and voters cite inflation and the cost of living as top economic concerns.
Mr. Biden has consistently struck a far more optimistic tone than the broader public on the economy, stressing month after month of rapid job growth — and an ensuing drop in the unemployment rate — as the country recovers from the pandemic recession.
After more than a year of watching inflation rise faster than his economic advisers projected, the president in recent weeks has attempted to convey more urgency with his comments on inflation, promising to do everything in his power to slow rising costs.
Top economic officials in the administration fanned out across cable news programs and the White House briefing room on Tuesday to hammer the message that job growth has rebounded strongly and that the economy is transitioning to a more stable growth rate — and to lower inflation.
Mr. Biden “understands that right now the top issue on people’s minds is prices — prices at the gas station, prices at the grocery store,” Brian Deese, who heads the White House National Economic Council, told reporters on Tuesday. “And he’s made very clear, and he’s communicating very clearly, that that’s his top economic priority and that we can address this from a position of strength.”
Inflation F.A.Q.
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.
Mr. Biden stressed those points in a Wall Street Journal opinion piece published online Monday evening, in which he stressed wealth gains for typical Americans on his watch and said the United States was “in a better economic position than almost any other country.” He promised to fight inflation by reducing the federal budget deficit, working to repair broken global supply chains, passing legislation to reduce energy costs for families and relying on the Fed.
“With the right policies,” he wrote, “the U.S. can transition from recovery to stable, steady growth and bring down inflation without giving up all these historic gains.”
Ms. Yellen acknowledged after the meeting on Tuesday that she had been wrong to downplay inflation, noting that the economy faced unexpected shocks and supply chain problems that boosted food and energy prices.
“Well, look, I think I was wrong then about the path that inflation would take,” Ms. Yellen told CNN.
While Mr. Biden has announced some measures aimed at reducing costs — and Mr. Deese and other aides have called on Congress to do more to aid in the effort — the president has made clear that he is counting on the Fed to help tame inflation.
Rapid price increases are also a problem globally, as beleaguered shipping routes and factory shutdowns in China keep some goods in short supply and as the war in Ukraine pushes up fuel and food costs. The European Central Bank is expected to begin raising interest rates this summer, and the Bank of England, Reserve Bank of Australia and Bank of Canada are among a group of other monetary policy authorities that have already begun raising their borrowing costs.
With central banks around the world pulling back economic support, the war in Ukraine stoking uncertainty and China locking down cities to try to keep the coronavirus from spreading, risks to the global economy are significant.
At the Fed’s meeting this month, “various” policymaking officials “noted downside risks to the outlook, including risks associated with the Russian invasion and Covid-related lockdowns in China and the likelihood of a prolonged rise in energy and commodity prices,” minutes of the gathering, which were released last week, showed.
