TEHRAN (Iran News) – U.S. President Joe Biden has conceded that the American people are “really, really down” amid volatility in the economy, surging gasoline prices that are hitting family budgets, and having dealt with the deadliest coronavirus outbreak in the world.
“They’re really down,” Biden said, “the need for mental health in America, it has skyrocketed because people have seen everything upset. Everything they’ve counted on upset.”
The U.S. President claims “that most of it is the consequence of what’s happened, what happened as a consequence of the Covid crisis.”
Economists argue financial difficulties facing many households is the number one problem Americans are experiencing right now with a possible recession on the horizon.
Although wages are rising in the U.S., they are nowhere near rising as fast as inflation.
With soaring inflation, the Fed resorted to desperate measures on Wednesday and increased its benchmark interest rate to 0.75 percentage-point, the largest hike since 1994.
Experts say the shadow of a recession is hanging over the United States. Lower-income and vulnerable Americans are especially the ones who get most hurt by a recession because they tend to be the first fired from their jobs when the economy slows.
Biden outlined some of the hard choices he has faced, claiming the U.S. needed to stand up to Russia for its military operation in Ukraine, not the first time the U.S. President has used Russia for problems back home.
Many analysts argue the Biden administration’s refusal to positively respond to Russia’s security guarantees months before Moscow’s military operation in Ukraine would have prevented the crisis in Eastern Europe.
Instead, the U.S.-led NATO military alliance chose to continue its eastward expansion toward Russian borders, a decision that triggered Moscow to demand security guarantees, which the Kremlin ultimately did not receive.
The ensuing unprecedented sanctions imposed by the U.S. and its Western allies, as a result of Russia’s military operation, have led to gas prices to sky rocket back home in America; creating a real political risk for Biden and the Democrats during an election year for both the house and senate.
Asked why he ordered the sanctions against Russia that have disrupted food and energy markets globally in addition to increasing gas prices, Biden alleged that he made his calculation as “commander in chief” rather than as a “politician”.
As a result, nationally, gas now costs an average of $5 per gallon, close to $2 higher than a year ago. In California, a gallon of gas now costs more than $6, up from just over $4 a year ago.
Biden has pleaded with oil companies to increase production after the West’s ban on Russian oil but to no avail. The U.S. President has also summoned top oil executives to the White House to discuss ways they can “work with my administration to bring forward concrete, near-term solutions that address the crisis”.
But with little competition among U.S. oil companies, observers say the top oil executives are likely to cash in the profits instead of expanding production.
While many economies around the world are taking a hit, one of the most unique factors in the U.S. is that hugely-profitable corporations with significant market power are using inflation as a cover for raising their prices.
Oil and gas giants are the classic example and they are making record profits.
In the first quarter of 2022, Chevron’s profits more than quadrupled from the first quarter of 2021, while ExxonMobil’s profits more than doubled despite taking a $3.4 billion hit for cutting its business with Russia.
ExxonMobil won’t be using its incredible profits to ease the burden on consumers at the gas pump, but rather to increase its stock buybacks. The oil giant now plans to buy back $30 billion of its own stock, up from the $10 billion it announced earlier this year.
The Fed’s rate hikes nor President Biden will stop these companies from overcharging or making more profit and that is essentially what’s wrong with the Fed and the President, along with bailing out other large banks when they are in trouble and similar measures that serve the super-rich instead of average households.
American prices for goods and services was 8.6 percent higher last month and more than they were a year ago and the steepest rise in more than 40 years.
Biden’s bleak assessment of the national psychological mindset of Americans comes as voters have strongly disapproved of his job performance and the direction of the country.
According to a May poll from The Associated Press-NORC Center for Public Research, only 39 percent of U.S. adults approve of Biden’s performance as president, dipping from already negative ratings a month earlier.
Quinnipiac University’s national poll puts Biden’s approval rating at 33 percent which is equal to the lowest rating for his administration.
Overall, only about 2 in 10 adults said the U.S. is heading in the right direction or that the economy is good, both down from about 3 in 10 in April.
Among Democrats, just 33 percent within the president’s party say the country is heading in the right direction, down from 49 percent in April.
The tightening of the Fed policy has caused financial markets to slump and led many economists to warn of a recession over the next six months.
The Fed’s announcement that it would hike its interest rate range by 0.75 percentage points after an alarming surge in inflation in the month of May came unexpected. Until this week the Fed had been expected to announce a smaller increase.
On Thursday, U.S. stocks tanked amid investors’ concern over the potential economic costs of the Fed’s aggressive fight with inflation.
The S&P 500 fell by 3.25 percent to 3,666.77, its lowest level since December 2020. The Nasdaq Composite plunged by more than four percent, bringing the index down by more than 30 percent for the year to date. The Dow sank by 741 points, or 2.4 percent to close below 30,000 for the first time since January 2021.
At a press conference, the Central Bank’s chair, Jerome Powell, said the Fed decided a larger hike was needed after recent economic news, including last week’s announcement that inflation had risen to a 40-year high.
But the central bank’s rate hikes increase the costs of borrowing to individuals and consumers, which causes them to cut back on purchases of everything, which is causing the economy to slow.
In the face of rising costs, there are already signs that struggling households are staying away from spending on a wide variety of high street goods.
According to the commerce department, retail spending fell for the first time this year in May. Home sales have fallen for three consecutive months and consumer confidence hit a record low between May and June.
In a new report, Feeding America, the nationwide network of 200 food banks, says more than 53 million Americans turned to food banks, food pantries, and meal programs for help in 2021.
Claire Babineaux-Fontenot, CEO of Feeding America says “local food banks, food pantries, food shelves, and other community food programs have become an essential piece of a household’s food budget, especially now when we face new challenges with rising food and gas prices and other supply chain issues.”
“As we set out to identify and co-create solutions to end hunger by 2030, we need to make sure that the people using our services have a seat at the table and their voices are heard,” she noted.