The Biden administration’s budget for fiscal year 2023 included a projection that Consumer Price Index (CPI) inflation would reach 2.3%, an estimate that White House officials admitted was outdated in part due to Russia’s invasion of Ukraine.
President Joe Biden on Monday unveiled his budget for 2023, which included funding for increased defense and law enforcement spending as well as increased taxes on wealthy households. The budget included economic assumptions predicting that the rate of CPI inflation would decline significantly to reach 2.3% in 2023.
“First of all, let’s remember that the forecast was locked on Nov. 10 of 2021,” Cecilia Rouse, chair of the Council of Economic Advisers, told reporters on a press call Monday after she was asked how the White House determined its inflation figure. “So that was quite a while ago. So this — this economic forecast, if we were updating today, we would look at it somewhat differently.”
“Nonetheless, we expected, back in November, that inflationary pressures would ease as the economy started to renormalize; as we learned to keep our economic activity going, supporting us through the pandemic, and as supply chain challenges started to renormalize,” Rouse added, saying that the administration “expected these inflationary pressures to ease over the coming year.”
Rouse then said that the White House’s inflation forecast was distorted due to Russia’s invasion of Ukraine, which she said exacerbated inflationary trends.
“Then Russia invaded Ukraine,” Rouse said. “That has created additional upward pressure on prices.”
“That happened in February, well after our forecast was already completed,” Rouse added. “We do expect that that is going to create additional price pressures over the coming years.”
U.S. President Joe Biden introduces his budget request for fiscal year 2023 in the State Dining Room of the White House on March 28, 2022 in Washington, DC. (Photo by Anna Moneymaker/Getty Images)
Rouse said that the White House’s initial inflation forecast included factors such as the COVID-19 pandemic’s impact on the economy and ongoing supply chain dysfunction, but predicted these factors would ultimately ease. (RELATED: Are Bond Yields Signaling That A Recession Is On The Horizon?)
“But let’s understand where the inflation forecast comes from,” Rouse told reporters. “We were living through a pandemic where we supported households, as we needed to do, to get through this health crisis, and at the same time, the supply chains crumbled beneath us.”
“As a result, we had a mismatch between supply and demand, which generated some inflation,” Rouse said, adding that inflationary pressures are being felt around the globe.
The White House did not immediately respond to the Daily Caller News Foundation’s request for comment.
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