Biden unexpectedly backed the opinion of his critics who have said the U.S. dollar is losing its buying power due to the government giving money to cover COVID-19 aid.
The President said stimulus funds that he approved into law are partially because of demand passing the supply of goods, causing a backlog at major U.S. ports and the highest annual inflation rate since 1990.
“The irony is people have more money now because of the first major piece of legislation I passed. You all got checks for $1,400. You got checks for a whole range of things,” Biden said during a speech in Baltimore.
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“If you’re a mom and you have kids under the age of 7, you get $300 a month and if it’s over 7 to 17, you’re getting $360 a month,” he said, misstating the second amount, which is $250 per month.
“It changes people’s lives. But what happens if there’s nothing to buy and you got more money to compete for getting [goods]? It creates a real problem,” Biden said.
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“On the one hand, we’re facing new disruptions to our supplies. At the same time, we’re also experiencing higher demand for goods because wages are up as well as people have money in the bank. And because of the strength of our economic recovery, American families have been able to buy more products.”
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But the President said he thinks inflation will recede, arguing that many people are sitting at home ordering goods online rather than spending their money at restaurants and bars.
“[People] are not going out to dinner and lunch and going to local bars because of COVID. So what are they doing? They’re staying home and ordering online, and they’re buying products,” Biden said.
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“Well, with more people with money buying products and less products to buy, what happens? The supply chain’s the reason, the answer is you guys, I’ll get to that in a minute. But what happens? Prices go up.”
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Biden said that “more products are being delivered than ever before — that’s because people have a little more breathing room than they did last year. And that’s a good thing. But it also means we’ve got higher demand for goods at the same time we’re facing disruptions in the supplies to make those goods. This is a recipe for delays and for higher prices.”
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