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San Francisco Federal Reserve Analysis Debunks White House Excuses on Inflation

Democrats insisted on passing a $2 trillion so-called "stimulus," despite bipartisan warnings about inflation.
April 13, 2022 — Blog    — Press Releases    — Select Revenue Measures    — Worker and Family Support   

Too much stimulus is to blame for price increases, according to a new paper from the San Francisco Federal Reserve Bank that shows why U.S. inflation is surging higher than the rest of the world.

  • Democrats insisted on passing a $2 trillion so-called “stimulus,” despite warnings from former Obama-Biden Administration officials like former Director of the National Economic Council Larry Summers and former Chairman of the Council of Economic Advisers Jason Furman that it would stoke inflation.
  • The Administration dismissed these warnings as “a high class problem,” and claimed that inflation was “transitory.”
  • Now Americans are suffering, as the Consumer Price Index reveals an 8.5 percent increase in consumer prices from the previous year, and the Producer Price Index points to historic highs in wholesale prices that beat forecasts and records for data going back to 2010.

So why are Americans uniquely suffering from higher inflation? The analysis from the San Francisco Fed shows U.S. inflation is leading the world owing largely to the “sizable fiscal support measures aimed at counteracting the economic collapse due to the COVID-19 pandemic.”

Key Takeaways:

  • The White House has repeated the misleading claim that inflation is no worse than the rest of the world, and merely part of a global trend.
  • Experts at the San Francisco Fed write: “…Since the first half of 2021, U.S. inflation has increasingly outpaced inflation in other developed countries. Estimates suggest that fiscal support measures designed to counteract the severity of the pandemic’s economic effect may have contributed to this divergence.”
  • According to the Pew Research Center in November, prices in the United States have been rising more quickly than almost anywhere else.

Democrats' policies largely contributed to inflation

As Eric Boehm of Reason writes: “The value of this Federal Reserve analysis is that it does not look forward in time and try to project what will happen, but reviews existing data to tell what did in fact happen. Putting more money directly in Americans’ pockets and bank accounts caused inflation to get worse than it otherwise would have been.”