Strange to see the White House taking a victory lap on the latest economic data, which show consumer prices rose 5% over the last year and 0.1% in March. Those numbers seem good only compared to inflation, which peaked last year at around a 9% annual rate.

Biden and the big spenders in Congress are now arsonists in firemen’s clothing, taking credit for extinguishing their own inferno. As the government spent, borrowed and printed trillions of dollars it didn’t have, it vastly expanded the amount of money without a commensurate increase in the size of the real economy.

That devalued the dollar, a necessary step in the massive wealth transfer from the people to the government, a process better known as inflation.

The administration is using technicalities to pass this data off as a win. For example, an official statement from Biden said “wages [are] now higher than they were 9 months ago, after accounting for inflation.” That is true, but it is damning with faint praise because nine months ago is the only point in his presidency when real wages were lower than they are today.

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By June 2022, wages adjusted for inflation had fallen 5.2% from when Biden took office. The latest data show real wages are down 5.1% under Biden. In other words, you are still demonstrably poorer, just slightly less so.

And that is despite very robust nominal earnings growth of about 10% since January 2021. Even that relatively fast rise in wages has been outpaced by consumer prices, which are up about 15% in that same time.

Worse yet, the supposed victory for which Biden is taking credit comes as the economy faces other headwinds.

After depleting the Strategic Petroleum Reserve (and reneging on a promise to refill it) while also hamstringing domestic production, the administration has left America vulnerable to the whims of the OPEC+ nations, which recently decided to cut production.

That will put upward pressure on energy prices, which will increase other prices throughout the economy.

And there are scarier problems at the Federal Reserve, which has been “sterilizing” $6 trillion in freshly printed cash, essentially quarantining that money in its vaults to prevent that liquidity from circulating in the economy.

That has helped to keep a lid on inflation while providing money for the spendthrifts in Congress and the White House, but it’s not sustainable.

The Fed is paying $800 million a day in interest to banks and hedge funds to keep this charade alive, and that’s money the Fed is creating out of nothing. In other words, the Fed is now fueling inflation in the name of fighting it.

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Simply put, the Fed faces major risks as it unwinds its balance sheet. A line from Thomas Jefferson perfectly sums up the predicament in which Congress, the White House and the Fed have placed America: “We have the wolf by the ear[s], and we can neither hold him, nor safely let him go.”

And on top of the issues with the Fed’s balance sheet, the banking system is still in the shadow of the failure of Silicon Valley Bank.

Over $100 billion has moved from regional banks to the biggest banks in the wake of SVB’s collapse as the government has haphazardly extended deposit insurance to stem the run. If banks anticipate more stress and pull back from lending, it could further hamper growth.

Inflation has slowed only because the growth in federal spending has slowed. Looming economic problems suggest this is merely a lull in the fight against inflation, not time for a victory lap.

The White House and Congress must act immediately to cut spending and stem the damage from additional inflation in the months and years to come.