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Illustration: Annelise Capossela/Axios

With inflation numbers expected to come out hot this morning, a group of 56 economists says President Biden’s Build Back Better Act would counteract the impact of rising prices on Americans’ wallets.

Driving the news: The economists signed a letter, released Friday morning in conjunction with left-leaning advocacy group Invest in America Action, urging Congress to pass the social spending plan swiftly, in order to get the ball rolling on programs that will lower costs for essentials like child care, health care and education.

  • Notable signatories include Alan Blinder, former vice chairman of the Board of Governors of the Federal Reserve, and Elgie Holstein, former special assistant to the president for economic policy at the White House National Economic Council.

Why it matters: Inflation has rocketed into the nation’s consciousness over the last few months as prices rose faster than many economists had expected. Individual perceptions of it — either as temporary, or a near-existential threat, or something in between — are an outsized driver of consumer sentiment and political approval right now.

Be smart: As such, it's the latest hot button issue that groups of all stripes can latch onto to promote their agendas.

  • For instance, the GOP has gone all-in on a campaign to blame Biden for inflation, even adopting the term “Bidenflation.”

The backstory: While Republican groups insist that Build Back Better spending would further stoke inflation, the White House cites statements like this one from 17 Nobel laureates to argue the opposite, as Axios’ Hans Nichols has reported.

What's next: It's increasingly likely that Build Back Better, passed by the House last month, won't come to a vote in the Senate until next year, as the Washington Post reports.

Go deeper

Retail sales slipped a surprising 1.9% in December

Shoppers in San Francisco on Dec. 22. Photo: David Paul Morris/Bloomberg via Getty Images

Retail sales fell 1.9% in December compared to the previous month, suggesting that shoppers bought holiday gifts earlier last year as they faced rising inflation and supply chain issues.

Driving the news: The data is much lower than the 0% change predicted by economists, according to FactSet.

What Biden's Fed nominations mean for policy

Sarah Bloom Raskin at a 2013 hearing. Photo: Andrew Harrer/Getty Images

Now that President Biden's long-awaited nominations for vacant seats on the Federal Reserve Board of Governors have dropped, the big question is how Sarah Bloom Raskin, Lisa Cook, and Philip Jefferson, if confirmed, might shift policy.

  • The answer: Don't expect any big changes to the central bank's policy direction overnight — but do expect it to prioritize a healthy labor market more in the years ahead.

Why it matters: The Fed's actions shape the economy in ways that outlast the presidents who appoint them — and the Biden-appointed Fed looks to be a more explicitly pro-worker central bank than we've seen in modern times.

The big picture: With inflation running hot, the Fed is in the midst of a pivot to more hawkish monetary policy — possibly including raising interest rates in March.

  • Raskin, Cook, and Jefferson are unlikely to stand in the way of that pivot, and not just because the slow-moving Senate confirmation process means it will likely be well underway before they are confirmed for their new jobs.
  • The Fed is a consensus-driven institution, and the consensus has swung decisively in a hawkish direction in the last three months. Even normally-dovish officials like San Francisco Fed President Mary Daly and Chicago Fed president Charles Evans on board with the policy shift.

But over time, the new additions to the Board of Governors — who have a permanent vote on monetary policy, unlike regional Fed presidents who rotate — have emphasized the importance of running a hot labor market in order to achieve gains for workers and greater racial equality.

  • That implies the three new governors would resist continuing to push interest rates higher once inflation moderates.

What they're saying: "Inflation is so high and political pressures on the Fed are so strong (including from Democrats), that we doubt they will push hard against the will of the committee," wrote Roberto Perli and Benson Durham of Cornerstone Macro, in a client note.

  • But, they add, "Because all of them have expressed views in favor of broader expansion of the labor market, … we can expect them to resist substantial tightening in the future."

Regulatory policy is a different matter. If confirmed as vice chair for supervision — and Republican Senators will try to stop that from happening — Raskin would have more explicit power over a wide range of regulatory policy, and look to rein in the deregulatory impulses of her predecessor, Trump appointee Randal Quarles.

The bottom line: As the Biden Fed takes shape, it will include more voices focused on workers than in modern memory. But the course of policy depends on whether inflation trends allow them to act on those instincts.

Focus group: Biden weak on COVID response, strong on democracy

Photo illustration: Eniola Odetunde/Axios. Photo: Pool/Getty Images 

As President Biden approaches the one-year mark of his presidency, some swing voters say his handling of the pandemic has weakened him in their eyes.

  • But they see him projecting strength when he talks about protecting American democracy.

Driving the news: These were key takeaways from the latest Engagious/Schlesinger swing-voter focus groups for Axios, conducted Tuesday, just days after the president's Jan. 6 anniversary speech.