Something we all can celebrate!
August marks the first anniversary of the passage of the Inflation Reduction Act (IRA), a Biden Administration achievement already making its mark on the American economy. Americans know surprisingly little about the IRA, even as we start to reap the benefits of its passage. So let’s celebrate one of the most important legislative packages of the past 50 years!
We’re going to roll out this good news story in parts throughout August because it has accomplished so many goals. Let’s start today with a little background on the big picture, we’ll break down the different components as the month progresses.
It’s called the Inflation Reduction Act—so how is inflation doing? Inflation is down to 3%—that’s a six-point improvement compared to a year ago, when it stood at 9.1%. While the Fed is still aiming for that magic 2% metric, when you compare US inflation rates with the rest of our economic peers you’ll see how good the current number actually is:
Sometimes it’s a good thing to be in last place!
Don’t believe the hype? Well, even jaded Wall Street is convinced inflation is drastically slowing. Wages are now rising faster than inflation. Consumer confidence is rising rapidly. Unemployment is at 3.6%, the lowest level in over 50 years. Americans are more financially secure, with nearly 10 to 15 percent more in their bank accounts than in 2019, before the pandemic. The U.S. has recovered from the pandemic in far better shape than other economies. And there's no sign of a recession.
That, surely, is something to celebrate!
You might ask, “What does the IRA had to do with any of this?” Simply put, the IRA has helped drive down inflation by decreasing demand through fairer taxes; increasing supply through investments in manufacturing and clean energy; and cutting costs for energy, health care and prescription drugs. Unlike the 2017 Republican tax bill that added $1.9 TRILLION to our national debt, the IRA is fully paid for and will dramatically decrease the deficit. Predictably, NOT ONE Republican voted for the IRA, though they are now out in their states crowing about all the funding and progress it’s bringing to their districts .
Over the next few weeks we will look at the different elements of the IRA and the impact it’s having on different sectors of our economy—health care, renewable energy, manufacturing and tax policy.
So while you wiggle your toes in the sand on your vacation this summer, enjoy that warm glow that comes from knowing that through the IRA:
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