Rising Inflation, Household Income Growth Not Meeting Expectations Under Biden Admin

The U.S. economy is facing trouble under the Biden administration, with inflation climbing to 6.4% from last year, according to the U.S. Bureau of Labor Statistics.

The prices of all items have increased by 0.5% from December to January, marking the highest monthly increase since October.

The consumer price index (CPI), which measures inflation by tracking the change in consumer prices, was at 6.5% in December compared to the same time last year and rose 0.1% from November to December.

Despite the higher monthly increase, inflation is still below the four-decade high of 9.1% in June.

Investment expert Bill Smead of Smead Capital Management has warned that the high rate of inflation is likely to be “far stickier” and longer-lasting than many have predicted, and could last for a decade.

“The enthusiasm… right now is the hope that we’ll get a friendly Fed out of a soft landing, and we do not believe that is going to be the case,” Smead said. “We think the inflation is going to be far stickier and longer-lasting—in fact, a decade.”

Meanwhile, the outlook for growth in U.S. household income has taken a major hit in January, according to the Federal Reserve Bank of New York’s Survey of Consumer Expectations.

Despite elevated short-term inflation expectations, the latest data reveals the largest decline in household income growth projections.

“After increasing each month since September of last year, the median expected growth in household income dropped by 1.3 percentage point to 3.3 percent. This is the largest one-month drop in the nearly 10-year history of the series,” according to a press release.

“January’s decrease was more pronounced among respondents with no more than a high school education, respondents older than 60, and those with annual household incomes below $50,000.”