A new International Monetary Fund report suggests that the economic hiccups roiling American politics are actually being felt worldwide and probably have little or nothing to do with President Joe Biden’s leadership. Biden certainly isn’t blameless for at least a portion of the nation’s current inflationary spiral, but the monetary fund’s report makes clear that the entire world would be in economic turmoil regardless.
Global annualized inflation ranges between 5.7% and 8.7% — suggesting that the United States, at 7% inflation, is far from alone in feeling the strains of the post-pandemic recovery. Adding to those global woes are shortages of petroleum and grains posed by Russia’s invasion of Ukraine. The problems are likely to get worse before they get better, according to the World Economic Outlook report released last week.
“Economic damage from the conflict will contribute to a significant slowdown in global growth in 2022 and add to inflation. Fuel and food prices have increased rapidly, hitting vulnerable populations in low-income countries hardest,” the report says. Global economic growth rates, humming at 6.1% in 2021, could drop to around 3.7% this year and next because of impacts from the Ukraine war.
Biden took office just as the pandemic was starting to subside worldwide. Before then, consumer spending had plummeted amid a worldwide shutdown. U.S. unemployment rates peaked at 14.7% during the Trump administration.
The widespread availability of coronavirus vaccines in early 2021 helped spur a return to pre-pandemic employment and consumer spending patterns. The global supply chain was nowhere near ready to meet the sudden surge in demand. Factories couldn’t ramp up fast enough. The cargo demand overwhelmed shipping and trucking companies. Major ports backed up. But consumer demand kept surging, unabated, causing prices to skyrocket.
Motorists got back into their cars and hit the road again, leading to a sudden surge in demand for gasoline. Pump prices soared just as Russian leader Vladimir Putin decided to invade Ukraine. That prompted harsh international sanctions that forced a dramatic cutoff of oil and natural gas exports from Russia, the world’s largest exporter.
Republicans blame the price surge on Biden’s moves to review domestic pipeline plans and to delay some offshore drilling leases, but those decisions only affect production far in the future, not current supplies.
Biden did miscalculate in his assessment of the need for a greater U.S. economic stimulus as vaccines were rolling out. His $1.9 trillion stimulus package likely contributed to the inflationary spiral. But the International Monetary Fund report makes clear that, in countries far beyond U.S. shores, the same inflationary consequences and energy shortages are occurring despite having nothing to do with Biden’s decision-making.
Much as Republicans are trying to make Biden’s economic management the focus in their midterm campaigning, the reality is that he bears minimal responsibility even though he’s taking all the blame.
