President Biden was ready after Thursday’s positive inflation reading, speaking a bit more than two hours after the news was announced.
The inflation report for December showed that while inflation came in at 6.5% over the course of last year, it continued to decline in the second half—and even closed out 2022 with a 0.1% decrease in overall prices compared to November’s data.
"Today we got some good news, some good news for the economy," Biden said Thursday in his remarks from the White House complex.
The overall price drop announced Thursday was due to a sharp decline in gas prices in December and a deceleration in food price increases. The full report does include one note of caution when it comes to the so-called "core" inflation. That measure, which strips out food and energy, climbed 0.3% between November and December and 5.7% over the course of the entire year.
Biden addressed core inflation in his remarks saying it was "welcome news as well" there, noting it's the lowest level for that measure in a year.
Nonpartisan economic observers were positive as well. “The tide has turned, and improvement is now the prevailing trend,” wrote Bankrate.com Chief Financial Analyst Greg McBride after the numbers dropped on Thursday morning.
During a Yahoo Finance Live interview on Thursday morning, Biden aide Jared Bernstein added to the chorus touting the good news, but also acknowledged "we have more work to do, we are not out of the woods yet" citing the 6.5% inflation rate for 2022.
"We're gonna continue to press it," he said of the White House's plan for the coming months He argued that it remains possible for the U.S. economy to maintain recent gains in the labor market while also bringing inflation down further.
A focus on wage growth
Remarks from the President and comments from his team also reflected a focus on the issue of wage growth.
Biden and his aides referenced last week's jobs report, which showed continued upward pressure on wages despite Fed interest rate increases. Average hourly earnings in December rose by 0.3% and 4.6% over the course of 2022.
And while average workers have seen their buying power decrease over the course of 2022 as a whole, buying power beat inflation in December with wages going up and overall prices coming down slightly.
ECON NEWS TODAY:
✅Headline, core inflation DOWN
✅ Jobless claims remain LOW
✅ Food inflation LOWEST in 2 years
✅ Real wages UP
✅ CPI last quarter BELOW 2%— Ronald Klain (@WHCOS) January 12, 2023
"As inflation is coming down, take home pay for workers is going up," Biden said. "It all adds up to a real break for consumers [and] real breathing room for families."
Bernstein and other Biden aides pointed to last year's efforts to unsnarl supply chains as an additional reason for the recent spate of good inflation news.
The question of the Federal Reserve
Nonetheless, the inflation rate remains well above the Federal Reserve's long-term price stability target of 2%.
The level of inflation may have peaked but "the level of inflation is nowhere near where the Fed wants it to be, so they are going to continue to tighten it a little bit," predicted Sanctuary Wealth Chief Investment Strategist Mary Ann Bartels in a Yahoo Finance Live interview Thursday.
Left unanswered in Biden’s remarks is whether the White House and other top Democrats would consider more forcefully pressuring the Federal Reserve to ease up on interest rate hikes in light of the improving situation.
Biden didn't mention the Federal Reserve by name in his speech, focusing instead on his economic agenda and what he calls the extreme bills of House Republicans. During his interview, Bernstein hinted that the White House was not considering any public pressure on the central bank, citing Biden's previous remarks on how he approaches the economy, including a focus on maintaining "an independent Federal Reserve."
But some liberal groups were immediately focused on the central bank.
"Chair Powell should stop further rate hikes before he engineers a totally unnecessary recession," wrote Dr. Rakeen Mabud, Chief Economist, the Groundwork Collaborative, a progressive group allied with figures like Sen. Elizabeth Warren (D-MA). Warren has also called for Powell to ease up in recent months.
The Federal Reserve’s Open Market Committee is set to meet on Jan. 31 and Feb. 1 to decide its next steps.
Last month, Fed officials raised interest rates by 50 basis points, bringing the total benchmark policy rate to 4.25%, but representing a decline following a series of 75 basis point hikes that preceded it.
This post has been updated with additional context. Correction: An earlier version of this post misstated the name of Dr. Mabud's group. It is called Groundwork Collaborative.
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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