Inflation Eases… Urgent Need to Halt Profiteering
Announcement of Plans to Strengthen Supply Chains, Including Pharmaceuticals and Clean Energy Transition
On the 27th (local time), President Joe Biden of the United States warned, “It’s time for companies to stop price gouging.”
In a speech at the White House that day, President Biden criticized companies for artificially keeping prices high despite easing supply chain disruptions.
He emphasized, “Any corporation that has not brought their prices back down, even as inflation has come down, even as the supply chains have been rebuilt, it’s time to stop the price gouging.”
President Biden acknowledged that they are aware that the prices of many items remain high, and numerous households continue to face difficulties. He also mentioned that they have made progress in curbing inflation, but much work still needs to be done.
High prices are negatively impacting President Biden’s path to the presidency. Recent polls have shown that high prices threaten President Biden’s re-election bid.
Seemingly aware of this situation, President Biden emphasized that they have achieved progress in reducing costs across various items such as turkeys, air travel, and gasoline, thereby curbing inflation. The Federal Reserve Bank of San Francisco has stated that supply chain disruptions account for approximately 60% of the significant increase in U.S. inflation. The White House attributes the primary cause of price increases to the pandemic rather than government fiscal stimulus.
Defense Production Act and Pharmaceutical Production
Accordingly, President Biden presided over the first meeting of the newly established Supply Chain Committee that day and announced 30 measures to strengthen the supply chain. The National Security Advisor and the National Economic Council (NEC) Chairman co-chair the Supply Chain Committee. Key department heads, including those of Agriculture, Commerce, Defense, and Energy, participate as members. The committee conducts a supply chain review every four years. The first review is scheduled for the end of 2024.
The Department of Health and Human Services will invoke the Defense Production Act (DPA) to invest $35 million in domestic pharmaceutical production as part of the supply chain strengthening measures. They are preparing a report analyzing U.S. dependence on high-risk foreign suppliers and the pharmaceutical supply chain. The Department of Energy will provide approximately $300 million in subsidies to the coal sector to transition to a clean energy supply chain.
Jesse Rogers, an economist at Moody’s Analytics, lauded the White House announcement, describing it as a positive step. He commented that they can’t simultaneously address all the intricate issues intensifying the supply chain challenges. However, he noted that the measure focusing on pharmaceuticals, climate infrastructure, data security, and logistics will likely enhance resilience, promote intelligent infrastructure development, and foster international collaboration.
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