Bidens false claim that inflation was 9 percent when he took office

August 04, 2024

Inflation “was at 9 percent when I came in and it’s now down around 3 percent.”

— President Biden, in an interview with Yahoo Finance, May 14

Inflation continues to be an albatross for Biden as he seeks reelection. After decades of stable prices — inflation of about 2 percent a year — the sudden increase in Biden’s term was a shock, both for consumers and policymakers. Inflation, as measured by the year-over-year percentage change in the consumer price index, spiked to a 9 percent annual rate in June 2022. That was the highest level in 43 years. While it has come down to 3 percent, many experts had thought it would be lower by now. The Federal Reserve, which pushed interest rates sharply higher to cool the economy, has not lowered them in what was expected to be an election-year boost for the president.

Biden has tried to explain that inflation was largely the fault of the coronavirus pandemic, not his policies, and that his administration has made strides in reducing it. But in doing so, he has been sloppy in his phrasing. Twice in just the past week, he flatly has said inflation was 9 percent when he became president — when inflation was 1.4 percent when he took office.

Here’s a quick review of comments Biden has made on inflation in recent weeks.

“We have dramatically reduced inflation from 9 percent down to close to 3 percent. We’re in a situation where we’re better situated than we were when we took office where inflation was skyrocketing.”

— News conference with Japanese prime minister, April 10

“No president’s had the run we have had, in terms of creating jobs and bringing down inflation. It was 9 percent when I came to office, 9 percent.”

— Interview with CNN, May 8

Inflation “was at 9 percent when I came in and it’s now down around 3 percent.”

— Interview with Yahoo Finance, May 14

These are all variations on a theme — that inflation was already raging when Biden took office. But that’s false. The inflation rate was 1.4 percent when Biden took the oath of office.

White House officials say that Biden means to say the factors for 9 percent inflation in mid-2022 were already in place when he assumed the presidency. In other words, higher prices for goods and services would have happened no matter who was elected president in 2020.

Inflation initially spiked because of pandemic-related shocks — increased consumer demand as the pandemic eased and an inability to meet this demand because of supply chain issues, as companies had reduced production when consumers hunkered down during the pandemic. Inflation rose everywhere — with many peer countries doing worse than the United States — because of pandemic-related shocks that rippled across the globe.

A White House official pointed to an influential paper making this case that was written by Olivier J. Blanchard, former chief economist of the International Monetary Fund, and Ben S. Bernanke, former chair of the Federal Reserve. It was published by the National Bureau of Economic Research in 2023.

The official also noted that in the second quarter of 2021 (April to June), annualized core consumer price index — the index minus volatile food and energy prices — was 9 percent. “That was a big shock,” he said, though the Fed and other officials at the time believed it was transitory.

Still, Blanchard and Bernanke also concluded that inflation stayed high because of low interest rates and the impact of stimulus programs passed under both President Donald Trump and Biden that put dollars in people’s pockets and spurred some of that demand. Biden’s bill, passed in early 2021, might have especially fueled spending — as some economists (including Blanchard) warned at the time it would.

The final event that pushed inflation to 9 percent was Russia’s invasion of Ukraine in February 2022, which sent energy prices skyrocketing.

Defending Biden’s comment that no president has had the run he has had, the official said that Biden’s record compares favorably to Ronald Reagan, who also faced high inflation. Both presidents oversaw a similar reduction in inflation, but the unemployment rate increased and job losses grew under Reagan, according to estimates provided by the White House. “You have to look back to the late 1940s and early 1950s to find another period of such steep disinflation alongside unemployment remaining low,” the official said.

“When the pandemic shut down the chips factories overseas, prices of everything went up here at home. That semiconductor shortage drove one third of the surge in inflation in 2021, caused long wait lines of all kinds of products.”

— Remarks on the Chips Act in Syracuse, N.Y., April 25

Biden is proud of a law he signed in 2022 — the Chips and Science Act, which will provide nearly $53 billion for U.S. semiconductor research, development, manufacturing and workforce development. Here again, he ties inflation to pandemic-related events, in this case a shortfall in semiconductors. He specifically referenced 2021.

During the pandemic, microchip factories around the world were closed or understaffed because of lockdowns and quarantine policies, even as those same policies created demand for semiconductors in laptops, Xboxes and other tools for a virtual world. Russia’s invasion of Ukraine added to the shortage as 45 percent to 54 percent of the world’s semiconductor-grade neon, needed to make chips, was manufactured in Ukraine by factories that closed operations.

But Biden is wrong to attribute one-third of inflation to the semiconductor shortage. The White House official said that Biden meant to say that one-third of core inflation was caused by a spike in new and used automobile prices — a point the president posted on social media June 20. “Every vehicle needs about 3,000 microchips — so when chips were in short supply, prices went up,” the post said.

Auto prices did not increase only because of the semiconductor shortage. Factory shutdowns and global shipping problems also contributed. When the country reopened and Americans started traveling again, new cars were in short supply, causing a sharp spike in the price of used cars.

“We’ve created 15 million new jobs, and the salaries are outpacing the cost of inflation.”

— Interview on Nexstar TV in Scranton, Pa., April 16

Job creation by presidential term is often a misleading metric. Biden took office in the midst of a pandemic, and to some extent, many of these jobs are recovered from the pandemic.

As of April, there were 158.3 million employees in non-farm jobs, according to the Bureau of Labor Statistics. That’s an increase of nearly 6 million jobs above the level achieved in February 2020, before the pandemic crashed the economy. For reference, about 6.5 million jobs were created in the first three years of Trump’s term, though he ended his presidency with negative job creation. The labor force participation rate — the proportion of the working-age population that is either working or actively looking for work — remains lower than before the pandemic, though the White House official said it is higher than what the Congressional Budget Office projected.

While Biden reached all the way to the start of his term for the jobs number, the second half of his Scranton comment reflects a more recent trend. Since February 2023, wages have increased more than the consumer price index, but for much of Biden’s presidency, the opposite was true. In other words, going back to January 2021, wages overall have not kept up with inflation. The White House official said that when Biden took office, the wage numbers were affected because lower-income workers were laid off and so average earnings looked higher.

The Pinocchio Test

Three times now, Biden has suggested that inflation was 9 percent — “skyrocketing” — when he took office. But it was 1.4 percent in January 2021. According to the White House, Biden is arguing that the conditions for the 9 percent inflation reached in June 2022 were already in place when he became president 17 months earlier.

With proper framing, Biden could reasonably make that case, though economists may differ on whether Biden’s policies added fuel to the inflation fire. The Russia-Ukraine war certainly did.

But this is not what Biden said. While his other comments on inflation that we examined were imprecisely worded or slightly misleading, the fact that the president has gotten this wrong three times suggests this is more than slip of the tongue. He earns Four Pinocchios.

Four Pinocchios

(About our rating scale)

Send us facts to check by filling out this form

Sign up for The Fact Checker weekly newsletter

The Fact Checker is a verified signatory to the International Fact-Checking Network code of principles

ncG1vNJzZmivp6x7uK3SoaCnn6Sku7G70q1lnKedZL2wuMitoJyrX2d9c4COaWxoaWVkr6qwxKeqZp6RocCmecKlmKKlXam1osCMoqWfpJGptrC6jLCYrGVpYr2mvsKepa1lp52yr3nHnmStp5%2BgerCyxaKanmc%3D