Well, the results are continuously coming in for The Joe Biden Economy. They aren’t good and Americans know it.
We have runaway inflation that is approaching 20%. We have a declining stock market, down on the year. We have rising interest rates. We have increased government spending and debt, though to be fair Republicans aren’t exactly spendthrifts when they get power either.
There are no bones about it, Joe Biden and the people that work for him suck.
Today, GDP came out at minus 1.4%.
Just so you know, a “perfect” economy would see growth at about 3%-4%, and an inflation rate of 1%-2%. You cannot have negative inflation or stagnant prices in a growing economy because demand will drive prices higher.
Instead, we just have the government printing press handing out cash to people causing massive inflation. Our southern border is a total mess by design. Biden just crushed the energy industry again so energy won’t get cheaper.
It is starting to show up in the broader economy.
The last time our economy contracted was at the start of Covid. You can expect that, especially when the government forcibly shut down every business.
Economists who are hanging their hats on consumer spending are wrong. There is a reason consumers are spending. First, liberation from Covid is causing some spending.
Second, people are buying stuff in case. Here is an example. I inherited a Peloton from my son-in-law and daughter. We are storing it for them until they have a place for it. I went to the bike store to get the right clips for my bike shoes so I could ride it.
When I was in the store, I asked the sales guy if they had pedals for my road bike. I could switch out the pedals on my bike and wear the same shoe on both the Peloton and bike instead of having to switch out cleats every time which would be a pain.
They had one set of pedals in stock and didn’t know when they could get more. So, I bought them. That happens millions of times every day in America and it contributes to a rise in consumer spending. Add in the threat of inflation if I don’t buy it today, it will cost a lot more to buy tomorrow. I figure I can always return them.
The labor market is driving some growth as wages go higher. Basically, government transfer payments during Covid instituted a phantom $15 minimum wage. Creating that base caused all hourly wages to go up. Not only that, energy prices rising are forcing people to ask for more money.
If you think Covid ending would stop work from home, think again. Who wants to spend thousands of dollars every year to commute to work in their car?
What I think will happen is that the housing market which drives a lot of other parts of the economy and labor will slow down. It’s not rising interest rates.
It’s the fact that supply chains can’t deliver the stuff we want in a timely manner and bullwhip effects make it super hard to finish anything. You can’t get wall switches, you have a hard time getting doors, etc. Food costs aren’t abating and will continue to increase.
Plus the cost to rehab or build a home has gone way up. We have a 55 and older community near us here in Las Vegas. They are no longer letting you build a house there. Everything is on spec. That means as a homeowner buying a new house, you can’t choose any of the finishes. These homes happen to cost quite a bit more than the average home. $850k and up.
California governor and Democrat Gavin Newsome is a great realtor for Las Vegas, but he isn’t that great to sustain demand for homes at that price when you don’t have freedom to choose.
The guess is that the Trilogy development and others like it are terribly worried about supply chains so they will build a house with what they can get.
Higher wages, higher costs of materials, and higher prices don’t equal an economy that is going to expand. Remember, you can’t increase all three at the same rate. Profit margins are under attack.
Don’t make a profit, you go out of business. Maybe that’s what The Joe Biden Economy wants.
So much unnecessary suffering. And so few consequences for the people who willfully inflict it.
And so begins Bidenflation. Even worse than Stagflation!