Economist Peter Schiff pushed back against President Donald Trump’s latest claims on inflation, where he placed the blame squarely on former President Joe Biden and congressional Democrats.
GOP’s Spending Fueled Inflation
On Wednesday, in a post on X, Schiff said that Trump’s assertion that the record-high inflation was caused by policies pursued by Biden and Democrats in Congress was “false.”
According to Schiff, the 9.1% year-over-year inflation recorded in June 2022 stemmed from the fiscal and monetary policies that were enacted before Biden took office, and was the result of the “Fed-financed deficit spending passed by a Republican Congress and signed by Trump.”
Schiff, however, acknowledged that the subsequent Democratic policies under Biden contributed to the problem, saying, “Democrats just made it worse.”
Trump’s Inflation Figures Are Misleading
Trump has repeatedly touted his administration’s handling of inflation, while arguing that he inherited an economic mess from Biden that he was now “fixing.”
Democratic Strategist Jessica Tarlov has called this a “lie,” saying that Trump’s claim “doesn’t match real life,” since the figure quoted by the President leaves out key essentials such as food, rent and healthcare, while only considering cheaper gas prices.
Tarlov also mentioned that Biden left office with inflation at 2.9%, and not 9% as Trump had repeatedly claimed that he had inherited.
According to economist Justin Wolfers, Trump set unrealistic expectations by promising a drop in prices during his campaign trail last year, which he said “in a healthy economy, they almost never do.”
Wolfers said that the typical pattern following a period of surging prices is not deflation, but wage growth, which he said is not taking place, thus resulting in the “affordability crisis.”
However, recently, top officials at the Federal Reserve reached a rare consensus on inflation expectations, with New York Fed President John Williams and Fed Governor Stephen Miran both saying that they expect inflationary pressures to ease going forward.
Williams, a key ally of Fed Chair Jerome Powell, also said that the impact of Trump’s tariffs on inflation will be “more muted and drawn out” than expected.
Trump And Biden’s Inflation Records
The average year-over-year inflation under Trump, during his first term, stood at 2.46%, according to a report by Investopedia.
Under Biden, however, the average year-over-year rate soared to 4.95%, owing to the $1.9 trillion stimulus package to help the economy recover from the COVID-19 pandemic, along with the rising gas prices following Russia’s invasion of Ukraine during his term.
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