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Although government policy may have exacerbated inflation, which peaked recently in summer 2022, economists say coronavirus pandemic-related supply chain disruptions and price shocks from Russia’s invasion of Ukraine drove up inflation primarily.
The Federal Reserve has targeted interest rate increases to lower inflation and succeeded.
Hamas’ surprise terrorist attacks Oct. 7 precipitated the war in Gaza. These occurred on Hamas’ own timetable, and happened when inflation in the U.S. had cooled to near-the Fed’s 3% target level.
A TikTok user sought to causally connect two hot-button concerns: inflation in the U.S. and overseas wars.
The Nov. 18 post features a narrator who says, after stripping out frequent obscenities, "The … feds were raising inflation so they could fund this … war. The entire time that these companies and the Federal Reserve were raising prices on us and raising … interest rates on us, they were doing that so they could fund a … war. It had nothing to do with stimulating our economy or getting our economy back in line. They did this … on purpose so they could fund a … war against a bunch of civilians."
PolitiFact was tagged in the video, so we wanted to examine the claim. We found several problems with the TikTokker’s reasoning.
Government policy may have exacerbated inflation, which recently peaked in summer 2022. But supply chain disruptions because of the coronavirus pandemic and price shocks from Russia’s invasion of Ukraine were inflation’s primary drivers.
Also, Federal Reserve rate hikes have been targeted specifically at lowering inflation. Inflation is down from its 9% year-over-year increase in July 2022 to 3.2% in October 2023.
Finally, the purported synchronous timing of inflation and war does not add up. Israel’s military response, which has killed more than 11,000 people in Gaza, was sparked by large-scale terrorist attacks by Hamas, an armed Palestinian militant group, on Oct. 7.
Claim: The federal government was "raising inflation."
Government spending can have an effect on inflation. But it’s not the only factor.
The 2021 American Rescue Plan Act, a key piece of President Joe Biden’s economic agenda, added about $1.9 trillion to the economy, and economists across the political spectrum say this spurred inflation. They differ on how much; estimates range from 2 to 4 points out of the peak inflation rate of about 9%.
However, none of the experts PolitiFact interviewed for a previous fact-check, liberal or conservative, said Biden’s actions were solely responsible for all of the inflation. Past government spending, COVID-19-related labor market disruptions, shifting energy prices and supply chains also played significant roles. Russia’s invasion of Ukraine in February 2022 drove some prices even higher.
One can argue that Biden should have better understood his policies’ possible inflationary side effects, but there is no evidence that an intentional desire to provoke inflation, or warmongering, drove his policies. Biden’s stated goal for the American Rescue Plan was to help the nation recover from a difficult pandemic’s economic consequences.
Claim: Actions by the federal government and the Federal Reserve "had nothing to do with … getting our economy back in line."
Economists have told PolitiFact that the major policy reason that inflation has declined is a series of rate hikes by the Federal Reserve, which acts independently of the executive branch. Fed Chairman Jerome Powell has reiterated repeatedly that the goal was to leverage rate hikes to reduce inflation.
When the Fed raises interest rates, economic growth slows and demand cools, lowering prices. On March 16, 2022, the Fed’s main interest rate was 0.8%. Today, it’s 5.33%, the highest in a decade and a half.
The Fed’s rate increases have rippled throughout the economy and in some ways raised consumers’ costs by raising mortgage rates for homebuyers. But in almost every other way, the rate hikes make it less likely that consumers spend aggressively. By raising the cost of credit, the hikes cool consumer demand, which better aligns that demand with the available supply of goods and services, resulting in lower prices.
The Fed’s rate hikes, and the subsequent rise in mortgage rates, has "cratered the housing market," said Douglas Holtz-Eakin, president of the center-right American Action Forum think tank. And when the housing sector gets hit, he said, demand for a host of other things, such as appliances and home furnishings, falls, too. As a result, he said, "goods price inflation is almost gone."
"Few Americans give the Fed, Congress, or two presidents much credit for pursuing policies that limited the economic damage from a sharp and severe recession," said Brookings Institution economist Gary Burtless. But many Americans, he added, "blame the Fed, Congress, and at least one of the two presidents for the inflation that was generated by the mostly successful counter-recessionary policies of the federal government."
Claim: Government is using inflation to fund a "war against a bunch of civilians"
The U.S. gives more money to Israel than any other country. And Israel’s military response to the Oct. 7 Hamas attacks has resulted in the killing of more than 11,000 people in Gaza, many of whom are civilians.
But this does not mean U.S. inflation and the Israel-Hamas war are connected logically.
The Oct. 7 attacks were carried out on Hamas’ timetable, and when they happened, inflation was down to 3% — close to the Fed’s customary target level.
Also, U.S. aid earmarked to help Israel hasn’t passed Congress yet, because of differences between the Republican-led House and the Democratic-led Senate over whether to combine aid to Israel with aid to Ukraine.
This assistance would represent "a drop in the bucket relative to the economy," said Dean Baker, an economist with the liberal Center for Economic and Policy Research.
"There are political issues that can be raised about the merits of the spending, but we're talking about less than 0.1% of gross domestic product," Baker said.
The TikTok video said the federal government and the Federal Reserve were "raising inflation," something that "had nothing to do with … getting our economy back in line" but rather to fund a "war against a bunch of civilians."
Although government policy may have exacerbated the recent inflation that peaked in summer 2022, economists say coronavirus pandemic-related supply chain disruptions and price shocks from Russia’s invasion of Ukraine drove inflation primarily.
The Federal Reserve’s rate hikes have specifically targeted inflation and have succeeded, cutting the year-over-year rate by two-thirds.
Finally, the war in Gaza was precipitated by Hamas’ surprise terrorist attacks Oct. 7. These occurred when inflation in the U.S. had cooled almost to the Fed’s target rate.
We rate the statement False.
Bureau of Labor Statistics, "12-month percentage change, Consumer Price Index, selected categories," accessed Nov. 20, 2023
Federal Reserve Bank of St. Louis, "Federal Funds Effective Rate," accessed Nov. 20, 2023
Reuters, "Fed's Powell: higher rates may be needed, will move 'carefully,’" Aug. 25, 2023
CNBC, "The Fed isn’t confident it’s done enough to curb inflation—here’s what could happen next," Nov. 9, 2023
PolitiFact, "Do Biden’s policies get the credit for the decline in inflation, as Kamala Harris said?" Nov. 3, 2023
PolitiFact, "Biden’s American Rescue Plan fueled inflation. So did post-COVID shortages," April 20, 2022
Email interview with Dean Baker, co-founder of the Center for Economic and Policy Research, Nov. 20, 2023
Email interview with Gary Burtless, senior fellow at the Brookings Institution, Nov. 21, 2023
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