Biden: “Don’t blame me, blame the Pandemic and Putin”

“And, by the way, it’s a global problem, not just a U.S. problem.”

In a prior post, we channeled an analysis done by the the San Francisco Fed (FRBSF) that concluded:

In 2021, a relatively “normal” level of inflation (around 2%) was evident   in the major OECD countries — Canada, Denmark, Finland, France, Germany, Netherlands, Norway, Sweden, and the UK, but…

During the same period, inflation was more rampant in the U.S.  Specifically:

During the 1st 3 quarters of 2021, U.S. core CPI grew from below 2% to 4.7%.

In contrast, the OECD average increased at a more gradual rate from around 1% to 2.2% (over the same period).


That clever analysis by the FRBSF demonstrates that:

In the 1st 3 quarters of 2021, about 80% of the U.S. core inflation rate increase is statistically attributable to factors specific to the U.S. That is, only about 20% is attributable to globally common pandemic effects.

We ended the prior post with a question…

So, what are those specific factors?


Well, the FRBSF analysts took a statistical whack at that question, too.

Their underlying analytical logic focused on fiscal stimulus programs in the U.S. and the OECD countries:

One way to get a read on this tangle of support programs is to directly measure disposable personal income in each country.

This measures the amount individuals have left to spend or save after paying taxes and receiving government transfer payments.

It is a relatively comparable measure across countries that incorporates the overall magnitude of net pandemic transfers

And, the answer is…


Real disposable personal income for the OECD countries increased only moderately during the pandemic (2020 & 2021).

But, there are 2 obvious spikes in the amount of disposable income that Americans “enjoyed” during that same period:

Specifically, the two peaks in U.S. disposable personal income reflect the CARES Act, signed into law (by President Trump) on March 27, 2020 … and the American Rescue Plan (ARP) Act, signed (by Biden) in March 2021.

Both Acts resulted in an unprecedented injection of direct assistance with a relatively short duration.


OK, let’s overlay the above 2 charts…


The visually obvious conclusions that can be drawn:

1. The Trump era stimulus (CARES Act) appears to have been absorbed by the economy … with transfer payments (e.g. stimulus checks) largely offsetting lost wages … hence little impact on inflation in 2020.

2. But, the Biden ARP stimulus (passed with no GOP votes) appears to have literally broken the inflationary camel’s back … by infusing an unnecessary (and excessive) level transfer payments in the U.S. economic system … igniting a rampant surge in inflation (that was not comparably realized in OECD countries).

And, keep in mind, that this analysis was pre-Putin’s Ukraine invasion.


Bottom line: Sorry, Joe …  your excessive stimulus program — coupled with your war on domestic oil & gas production — account for the lion’s share of our current inflation woes.

Man-up and fix the problem!

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