No doubt about it, the economic news in recent weeks has been relentlessly negative. Indicator after indicator shows activity plunging sharply in key parts of the economy. Now, a widely followed indicator signals economic growth is likely to be zero in the current quarter, after the first quarter’s “unexpected” 1.4% decline.
Buckle up, looks like we’re entering a recession, folks.
Let’s review just some of the economic carnage of recent days:
- The Fed raised interest rates by 3/4 of a percentage point on Wednesday, the largest hike since 1994, as the central bank desperately tries to rein in our near-9% inflation rate.
- Mortgage rates surged above 6%, the highest since 2008, a level that is likely to tank home sales and hit consumers’ pocketbooks hard as adjustable-rate mortgages move upward along with interest rates.
- Producer prices soared at a 10.8% rate in May, an ominous sign of higher inflation for consumers down the road. That followed last week’s 8.6% yearly CPI number, the highest since 1981.
- Retail sales fell 0.3% in May, but jumped 8.1% from a year earlier. A good sign? Hardly. Adjusted for CPI inflation, growth was minus 0.5%.
- Small business optimism is its lowest ever, the National Federation of Independent Business said. This is key because small businesses are the No. 1 employer in America, usually first to hire in good times and first to fire in a slump.
- “Meanwhile,” AP reports, “the national average price at the pump reached $5.01 per gallon on Tuesday, up from $4.45 a month ago, and surging more than 60% in one year.”
- And before Wednesday, when the stock market rallied in relief that the Fed finally recognized the seriousness of the inflation problem, all of the post-Trump stock market gains had been erased.
- The Atlanta Fed’s GDPNow indicator, a kind of running tab of GDP data, fell to zero on Wednesday. A rule of thumb says two or more quarters of zero or negative growth equals a recession. By that standard, the Biden recession is here.
To sum it all up, “Between bad fiscal policy, bad monetary policy, and terrible energy policy, this is the witch’s brew that created this record-high inflation,” former Trump economic adviser Larry Kudlow told Fox Business’ Stuart Varney on Wednesday.
Joe Biden let it happen by following the awful advice of his White House advisers and the far-left Clown College he calls a Cabinet, possibly the most inept collection of political ideologues in our nation’s history. And that’s saying a lot.
Blame Biden for this economic debacle. He rages at others for his problems, but it took him a mere year and a half to dismantle a healthy, growing, noninflationary economy that already had rebounded smartly from the COVID lockdowns and make it a shambles.
You might think such obvious policy failure would lead to a pivot of some sort. But no. Biden has instead hit the hustings to once again rant that none of this is his fault, and to double down on the very policies that created this mess.
On Tuesday, Biden told union members a series of whoppers about the economy, such as, “Since I took office, with your help, families are carrying less debt nationwide. They have more savings nationwide.” Not true.
He also assailed critics for their “lies about reckless spending.” But even his own party’s leading economists don’t agree. They warned him repeatedly about excessive federal expenditures, but he didn’t heed them. He’s even absurdly claimed that Democrats’ rabid spending will “cut” $1.6 trillion from deficits this year, a claim no reputable economist takes seriously.
Oh, and he blamed Republicans, who control nothing in this government, for inflation.
Meanwhile, Biden and his party also continue to bash the oil industry over soaring oil and gas prices, even though Biden and gang have imposed massive new regulations, forced output cutbacks, cancelled new pipeline projects, and threatened additional taxes on oil.
Recall, just two years ago, we were energy independent. Today, even as we grovel before OPEC, the Saudis, Russia and even socialist Venezuela to pump more oil, John Kerry, Biden’s climate czar, says “we absolutely don’t need” to drill for more oil and gas.
Remember that next time you fill up your tank with gas over $5 a gallon. Sure, “Big Oil” always makes a convenient villain. But it’s not to blame.
In March, a sobering study by the San Francisco Fed found most of the U.S.’ inflation problem came from excessive government spending, accompanied by the COVID shutdown of the economy and supply-chain problems ignored by the Biden White House.
Biden and congressional Bidencrats spent $3.6 trillion extra during COVID, and then proposed trillions more to “Build Back Better,” along with hundreds of billions in other new spending “priorities.”
But it’s all phony stimulus. It will line the pockets of Democrats and their allies, but do nothing for the economy. No one spends their way out of a recession; they produce their way out.
“Unfortunately, Biden and some members of Congress seem intent on continuing the spending spree, regardless of how hot the inflationary fires get,” commented budget policy analyst David Ditch, at the Daily Signal. “Many pending pieces of legislation could open the spending spigot even wider.”
With all the spending, and more planned, the national debt now exceeds $30 trillion, up $5 trillion in two years. Federal spending has grown a stunning 53% since 2019, the year before COVID hit.
Democrats still want to spend more. But guess what? The Fed, which printed money promiscuously during the pandemic, is now tightening. And, as interest rates rise, so will government spending on our exploding debt. Expect your taxes to rise, and soon.
A while back, we asked the following question in a headline: “If Biden Intended To Destroy America, What Would He Be Doing Differently?” Others have wondered the same thing. And the answer remains the same: Nothing.
— Written by the I&I Editorial Board