Republicans should take a page out of the Democratic playbook, print signs saying “It’s the economy stupid” and plaster them across the country. As the $5 trillion stimulus spending dries up, the illusion of the Biden Economy is starting to fade. The economy will begin to slip into a recession that will hopefully be short.
Biden had a strong foundation before the pandemic, which he immediately squandered with trillions of wasted dollars. His stimulus checks ended up causing inflation, which destroyed the savings of ordinary Americans and reduced their standard of living.
The economy grew by 3.2% between July and September, and 2.6% between October to November. The latest GDP shows a sluggish 1.1% growth — and the BLS’s biggest news is the pounding the housing market has taken.
In a note to clients, Chris Zaccarelli said that the data this morning was the “worst of both worlds”, with inflation going up and growth going down.
The Fed has raised interest rates nine times in the past year as Jerome Powell tightened the screws on the economy to try and tame inflation.
A Conference Board economic model puts the probability of an American recession in the coming year at 95%.
The financial industry is unanimous in its belief that the economy will be struggling this year. As the Federal Reserve raises interest rates, more than a dozen major banks have forecasted little to no growth or even a possible recession.
Biden’s reelection economy faces new risks, such as a market-shaking battle over raising the debt ceiling and a possible banking meltdown which could cause lenders to tighten credit.
Gregory Daco tweeted Thursday morning, “The U.S. economic situation is not good, and it’s starting to show”.
“Today, we learned that the American economy remains strong, as it transitions to steady and stable growth,” the president said in a prepared statement. “This past quarter, real personal disposable income increased and American consumers continued to spend, even as the overall pace of growth moderated.”
Not quite “Morning in America,” but it’s hard to get the pig to stay still long enough to apply the lipstick.
Even Biden’s allies, such as former Treasury Secretary Larry Summers, warn that the economy must decline dramatically to end inflation.
Summers, speaking at an investment conference this week, said: “I believe we will have a difficult time getting to a 2-percent inflation target unless and until the economy significantly slows down.”
The economy’s latest reading was driven by the housing market, which is in decline and has been hit by rising interest rates. Consumer spending has remained strong, but will also be under pressure when the savings from the pandemic era run out and inflation continues pinching wallets. The report also showed that inflation was rising and not decreasing as the Fed expected, which means another rate increase is likely next week when policymakers from the central bank meet.
Biden will use the artificial growth numbers from the pandemic to prove his success when it’s actually a huge failure. Is five trillion dollars and this economy the best the government can do?
Denying reality will not prevent a recession.