Bush stood before airline employees in the weeks after the September 11 attacks, he offered a simple prescription for a reeling economy: “Get down to Disney World.” Two decades later, President Joe Biden faces a different kind of crisis, but one that demands a similarly personal appeal. He needs Americans to stop ordering so many things and start buying more services, a behavioral shift that could help untangle the supply chain bottlenecks driving inflation to a 31-year high.
The heart of the problem lies in a stark imbalance. Over the past 18 months, consumer demand for goods has surged far ahead of demand for services, according to Commerce Department data. While overall consumer spending has rebounded strongly from the pandemic recession, the hunger for merchandise has overwhelmed suppliers and ports, pushing prices higher. Sales at restaurants and bars were flat in October, a sign that the pandemic’s grip on service industries has not fully loosened, even as retail sales jumped 1.7 percent.
The White House has framed the price increases as temporary and pointed to the bipartisan infrastructure bill signed into law Monday as a long-term fix for clogged transport networks. But with midterm elections approaching and the president’s approval ratings sliding, the administration is leaning heavily on a less tangible tool: persuasion. Officials are casting the Build Back Better legislation as an anti-inflation measure, arguing that its tax cuts and subsidies for prescription drugs, child care, and elder care will ease household budgets and draw people back into the labor force.
The Limits of Presidential Power
Yet the president’s ability to directly control prices is sharply limited. “The best thing a president can do right now is jawboning and lessening expectations,” said Bill Hoagland, senior vice president of the Bipartisan Policy Center and a former Republican leadership aide in Congress. “I feel a little bit sorry for the president. A lot of this is out of his control.” Hoagland’s assessment underscores the delicate nature of the task: Biden must nudge consumers to change behavior without appearing to dictate their choices.
The challenge is that the very habits driving inflation are deeply rooted in pandemic psychology. After months of lockdowns and remote work, many Americans remain wary of crowded restaurants, theaters, and travel. Their preference for ordering goods online rather than venturing out for services has created a self-reinforcing cycle. Each new wave of purchases for furniture, electronics, and home improvement supplies adds pressure to an already strained supply chain, keeping prices elevated.
Historically, spending on goods grew more slowly than spending on services. The pandemic reversed that pattern. During the recession, demand for both categories collapsed, but the recovery has been lopsided. Goods spending has roared back while services spending lags, a discrepancy that economists say must close for inflation to cool. The administration’s message is that the bipartisan infrastructure bill and the proposed social spending package will help by improving logistics and making it easier for people to rejoin the workforce.
For now, the White House is betting that a combination of policy action and public encouragement can steer the economy toward a more balanced recovery. Whether Americans will heed the call to swap their online shopping carts for dinner reservations remains an open question, one that may determine not only the trajectory of prices but also the political fortunes of a president seeking a second term.
