In a survey carried out by The Balance, 35% of U.S. adults said President Biden bears the most blame for price increases and surging inflation. But the president wasn’t alone in catching heat in the survey, which was conducted in late June and early July. About one in five respondents said the pandemic was the most to blame, followed by corporations (13%) and Congress (10%). When respondents were asked to name who was “responsible” (rather than limit themselves to who was “most responsible”), the pandemic crept to the top with 50% of responses. President Biden was next at 48%, followed by Congress at 38%, and corporations and geo-political conflict tied at 31%. Although inflation showed signs of cooling in July, the latest data showed that rising prices are still with us. The Consumer Price Index (CPI) increased 0.1% in August from July (and 8.3% over last August), with prices for food, housing, and medical care leading the way.
Among Corporations, Americans Hold Gas Companies Most Responsible for Inflation
Among those who believe corporations are responsible for inflation, gas companies are taking the largest share of the blame, with 27% of respondents holding them directly responsible for high prices over other types of businesses such as banks, grocery stores, and pharmacies. A majority of those surveyed support government price caps and tax holidays for gasoline, both of which received bipartisan support from respondents. Gas tax holidays were supported by 68% of those who identify as Republican or Republican-leaning, and by 75% of Democrat and Democrat-leaning individuals. In June, President Biden asked Congress to suspend the 18 cent tax per gallon of gasoline until September, but there was no further action taken on it. Price caps on gas were backed by 69% of Republicans and Republican-leaning individuals and by 77% of Democrats and Democrat-leaning individuals. Although just 31% of U.S. adults hold corporations responsible, 63% of respondents said price gouging by corporations is fueling inflation. There is bipartisan agreement on this as well, with 51% of Republicans and 75% of Democrats thinking price gouging is happening. Gas prices across the country soared to $5 a gallon over the summer, but have cooled off in the recent months, helping to ease inflation slightly.
Political Divide Over Who To Blame for Inflation
Despite some bipartisan agreement, The Balance survey showed a strong political divide on who to blame for high inflation. Three-quarters of Republicans and Republican-leaning participants said Biden is mainly responsible, while 62% of Democrat and Democrat-leaning participants said the pandemic is the chief cause of high inflation. A strong majority (81%) of survey participants who identify as either Republican or Republican-leaning said Biden is not doing enough to fight inflation, compared to just 41% of Democrats who said the same.
Americans Unsure That the Fed Will Lower Inflation
Americans are also pretty divided on the Federal Reserve’s role in bringing down inflation. Over a quarter of respondents don’t think the Fed will lower inflation. However, 39% of respondents said they have faith that the central bank will act to lower inflation, with nearly the same amount, 35%, answering they are not sure. Democrats are more likely to think the Fed will lower inflation (47%), compared with 33% of Republicans. The Federal Reserve has been trying to fight inflation with a series of aggressive interest rate hikes over the past few months and it’s not done yet. Economists anticipate the Federal Reserve will deliver another super-sized rate hike next week. While higher interest rates are meant to cool inflation, they make borrowing money for things like car loans and mortgages more expensive for everyone.
What’s Really To Blame for High Inflation?
Generally, economists recognize two main mechanisms behind rising prices: demand-pull inflation and cost-push inflation. Demand-pull inflation happens when consumers have more money to spend, which causes prices to rise as more dollars chase the same amount of goods. Cost-push inflation happens when producers have to raise their prices because of supply and labor shortages and rising costs of production. So who or what is to blame for the higher prices for groceries, gas, and rent? The answer is not simple, and experts are divided, too. Economists at the Federal Reserve Bank of New York said both drivers have contributed. Supply chain constraints and labor shortages from the pandemic caused prices to rise, and this pressure was coupled with expansionary monetary policies that have increased demand from consumers by giving them more money to spend—think pandemic-era stimulus checks and tax credits. The Fed’s analysts said 60% of price hikes are due to added stimulus (demand-pull) and 40% are due to supply-chain snarls (cost-push). Other economists blame corporations that have benefited disproportionately—earning excess profits—from inflation. Still, others blame inflationary psychology, where businesses charge more money and consumers are willing to spend more money, in anticipation of higher prices in the future. In short—nobody is quite sure what’s or who’s to blame for high inflation, but there’s no shortage of opinion.
Methodology
The Balance conducted a survey among 1,200 Americans from June 30 to July 9, 2022. The survey was fielded online via self-administered questionnaire to an opt-in panel of respondents from a market research vendor. To qualify, survey participants (18+) must at least partially manage their own finances. Quotas were used to ensure national representation for gender, race/ethnicity, region, generation, using U.S. Census (2019 ACS) estimates as a benchmark. Quotas were also used to match national representation for political affiliation using Pew Research’s American Trends Panel (2022) as a benchmark.
