President Biden sought to reassure Americans on Wednesday by unveiling a pact to increase operations at the Port of Los Angeles as prices continue to rise and container ships sit in congestion, curtailing the US economy and holiday shopping.
Prices are rising in part due to container ships being held at ports and unloaded goods awaiting for trucks, causing widespread shortages and delays that have resulted in a longer-than-expected run of inflation.
High inflation erodes growth and wages; it provides fuel for the Republican Party.
Price hikes are eroding worker wages, stifling growth, and fueling Republican attacks on Biden at a time when his multitrillion-dollar tax, economic, climate, and infrastructure plan is facing the furnace of congressional deliberations.
The White House addressed the backlog by negotiating an arrangement to enable the Port of LA to operate 24 hours a day, seven days a week. The expectation is that overnight activities will aid in breaking the logjam and shorten shipping times for toasters, footwear, bicycles, and automobiles, among other items.
“With the holidays ahead, you may be worrying about whether the gifts you intend to purchase will arrive on time,” Biden told reporters at the White House. “Today, we have some wonderful news: We’re going to help expedite the delivery of goods throughout the United States.”
However, the broadening of port operations was an implicit acknowledgment that inflation has stayed higher even after the economy reopened following the coronavirus crisis. Businesses expressed concern in June about months-long container shipping delays. Still, the government constituted a supply chain task group that month and assigned a port envoy on Aug. 27 to resolve the issue.
In the face of growing inflation, Biden sees a selling angle for “Build Back Better.”
Conjointly, Biden noted that ports are only one aspect of the puzzle. The country needs extra truck drivers, private retailers to step up, improved infrastructure, and a supply chain that is less susceptible to disruption from pandemics and lousy weather.
The president is striving to exploit the situation to sell his policy proposals, which Congress is now scrutinizing.
“We need to take a longer view and invest in increasing our resilience to the forms of shocks we’ve seen years after year, such as pandemics, extreme weather, climate change, cyberattacks, and weather disruptions,” he said.
Many Americans’ attention is increasingly getting distracted by a sense of insecurity.
Betsey Stevenson of the University of Michigan observed on Twitter that the “economy is in an extremely precarious and unprecedented state.” Prices are increasing at a rate of more than 5%, trade in goods and services has dropped, and more Americans are quitting their jobs, all while the coronavirus pandemic is a risk due to the delta variant.
“No one knows for certain what will happen,” Stevenson, a former member of President Barack Obama’s White House Council of Economic Advisers, wrote.
California ports in Los Angeles and Long Beach handle 40% of all shipping containers entering the United States. According to the Marine Exchange of Southern California, 64 ships were berthed at the two ports on Tuesday, with another 80 awaiting docking and unloading.
The administration banks on big retail & shippers
Undertakings from the Los Angeles port’s operator, dockers, and several of the country’s major retail and shipping corporations are expected to boost the backlog’s clearance.
Walmart, FedEx, UPS, Target, Samsung, and The Home Depot have committed to offloading during off-peak hours, allowing the Los Angeles port to operate continuously. Nearly three weeks ago, the Long Beach port worked 24 hours a day, seven days a week.
Lead up to his address, Biden also convened a virtual roundtable discussion with executives from Walmart, FedEx Logistics, UPS, Target, Samsung Electronics North America, the Teamsters Union, and the United States Chamber of Commerce.
Republican congress members allege that Biden’s $1.9 trillion coronavirus relief package triggered rising inflation. According to new research by Goldman Sachs, “supply-constrained goods” account for 80% of this year’s inflation overshoot. However, political scrutiny continues to hurt as housing and oil prices exacerbate inflationary pressures.
Senate Republican Leader Mitch McConnell of Kentucky has made inflation a principal complaint against Biden, indicating that reining inflation may be invaluable for Democrats seeking to retain legislative seats in next year’s elections.
“The Democrats’ inflation is so severe that, even though the ordinary American worker received a multiple-percentage-point salary increase over the previous year, their actual purchasing power has been eroded,” McConnell said last week in a Senate speech.
“Even dollar stores are experiencing price hikes. Just check with any American family about their recent grocery store, petrol station, or toy store visits. For goodness’ sake, they haven’t had to deal with the housing or auto markets recently.”
According to the Biden administration, greater inflation is just temporary. Nonetheless, supply chain bottlenecks persisted months after the economy reopened and recovered as vaccines mitigated many of the pandemic’s threats.
The Bureau of Labor Statistics said Wednesday that consumer prices increased 5.4 percent from a year ago. This is well above the Federal Reserve’s target of 2%. Increased expenses of energy, food, and housing were the primary drivers of September price rises.