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If Your Time is short
• Whether Biden is correct depends on how his wording is interpreted.
• On the one hand, every other major industrialized nation has seen inflation spike well above pre-inflation levels.
• However, the United States has seen its inflation rate spike higher than its most direct competitors.
When President Joe Biden sat down for an interview with the Associated Press, it was inevitable that the nation’s 40-year-high levels of inflation would come up.
During the interview, Biden said his policies are not to blame. Instead, he pointed to global conditions to show that the United States is not alone in facing such challenges as high oil prices, lagging supply chains during the pandemic, and disruptions from Russian President Vladimir Putin’s war in Ukraine.
Biden said, "First of all, (a recession is) not inevitable. Secondly, we’re in a stronger position than any nation in the world to overcome this inflation. It’s bad. Isn’t it kind of interesting? If it’s my fault, why is it the case in every other major industrial country in the world that inflation is higher? You ask yourself that? I’m not being a wise guy."
A reader noticed this statement and asked us to fact-check it.
The statement can be read two ways. Is Biden (as the reader understood it) saying that every other "major industrial country" has a higher inflation rate than the U.S. does right now? Or is Biden saying that every other major industrial country has higher inflation than they normally do?
The White House did not respond to an inquiry for this article. But we’ll look at both interpretations. The accuracy of his statement depends on how his words are interpreted.
If this is what Biden meant, he would be wrong.
We turned to data collected by the Organization for Economic Cooperation and Development, a group of advanced industrialized nations.
Looking at the most recent monthly inflation numbers, more than a dozen OECD members had a higher inflation rate than the United States’ 8.6%. These were predominantly Baltic and Eastern European nations, which have been hit especially hard by the consequences of Putin’s invasion of Ukraine.
But a larger number of OECD members had inflation rates lower than 8.6%, and these include all but one member of the G-7 group, which is limited to the world’s very largest democratic economies.
Among the G-7 nations, Germany’s most recent inflation rate was 7.9%, the United Kingdom’s was 7.8%, Italy’s and Canada’s were 6.8%, and France’s was 5.2%. (The final G-7 member, Japan, hasn’t released current inflation numbers.)
So the United States has a higher inflation rate currently than its closest economic peers do.
If this is what Biden meant, he would be right.
In the six G-7 nations for which current inflation data is available — including the United States — pre-pandemic inflation rates hovered around 1% or 2%, rather than the 5% to 9% being seen now.
Some analysts would suggest that these two observations are consistent. They say that Biden’s coronavirus relief bill — the American Rescue Plan, which passed shortly after he took office in 2021 — drove inflation higher in the United States than it did in the other countries, which had no equivalent fiscal stimulus of that scale that late in the pandemic.
"The Biden administration and its allies in Congress provided entirely too much stimulus into an economy that was already dealing with supply shortages," said Michael Faulkender, a professor of finance at the University of Maryland’s Robert H. Smith School of Business. "This is necessarily inflationary and was totally predictable."
That said, the U.S. may have benefited in other ways from its expansionary monetary and fiscal policy during the pandemic compared to other rich countries, said Brookings Institution economist Gary Burtless.
The U.S. may have "obtained some advantage from those expansionary policies in terms of faster real economic growth" than its rivals, Burtless said. The downside, he added, is that these policies also seem to have produced the disadvantage of higher inflation.
Biden said, "In every other major industrial country in the world … inflation is higher."
He’s right in one sense but wrong in another. Every other major industrialized nation has seen inflation spike well above pre-inflation levels. But the United States has seen its inflation rate spike higher than its most direct competitors.
We rate the statement Half True.
Associated Press, transcript of interview with President Joe Biden, June 16, 2022
Organization for Economic Cooperation and Development, international inflation data, accessed June 21, 2022
Email interview with Gary Burtless, senior fellow at the Brookings Institution, June 21, 2022
Email interview with Michael Faulkender, professor of finance at the University of Maryland’s Robert H. Smith School of Business, June 12, 2022
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