Has the Fed won the war on inflation?

Or does the Fed just redefine "winning" to pander to Washington?

For most Americans, inflation is the rising cost of living measured in what it costs to put a roof over your head, put food on the table, put gasoline in the car and heat your home in the winter. When household expenses exceed household income, families are forced to borrow to make ends meet and credit card debt rises. Rent and mortgage costs are at multi-year highs.

The Biden administration wants to claim credit for lowering inflation pointing to the “Inflation Reduction Act” (IRA) which has little to do with inflation and more to do with pandering to climate activists who are part of the Democrat party base. The IRA pork barrel may garner votes and prompt some wealthy Americans to buy a Tesla or Ford Lightning but does nothing to help the average household deal with rising costs of living.

The Fed gives Biden ammunition by claiming inflation is abating pointing to its favorite measure of inflation which excludes “food and energy” which has come down nicely over the past year and has fallen below 3% from a peak close to 6% and consumer consumption in real terms has risen in recent months-. Case closed?

Hardly. The touted outcome is fueled by higher borrowing on credit cards now well over $1 trillion and the government transfers under Biden have seen the national debt surge to over $34 trillion. The U.S. economy is living literally on “borrowed time”.

Under Biden, the number of Americans who say they live “paycheck to paycheck” has risen to 65%. “Bidenomics” has little to do with economics and lots to do with creating a narrative that pretends Democrats care about ordinary people while promoting policies that damage their future. Biden’s only substantive election platform with a fact base is that “he is not Trump”. That worked for him in 2020 but seems to be faltering in 2024. Even leftist NBC’s recent polls show the 2024 contest close but Trump leading Biden although the outcome is within the margin of error.

A broader look at even more recent polls shows Trump’s edge over Biden widening.

A lot can change in the 9 months to election day, and you can expect to see a lot of “pork” emanating from the White House targeted at retaining the support of the far left and winning over independents but it seems unlikely that Biden will persuade many Republicans to jump ship. In parallel, a surprising percentage of Black voters have decided they prefer Trump to Biden and Trump has wiped out Biden’s lead among Latinos.

American politics has become a blood sport with the country sharply divided with few policy overlaps. The key issues are the Southern border, housing costs, persistent inflation measured by the actual cost of living and not some artificial metric that avoids reality, rising federal deficits heaped onto already excess debt, and the virtually certain rise in income taxes under a Democrat president unwilling to cut outlays and at risk to a buyers’ strike in bond markets.

Trump’s character is the target for Democrat attacks rather than his policies of “drill baby drill” to lower energy costs, lower taxes, smaller government and a secure Southern border. The benefit and burden of democracy is that you get what you vote for. November will be interesting if either Biden or Trump drop out, either by choice or circumstance. As it stands, a Trump presidency seems more likely than not.