Next week, President Joe Biden plans to take a road trip to tout how great the economy is to the American people. It shows that, once again, the Washington, DC, elite are completely disconnected from most Americans’ everyday lives. On Thursday, the Bureau of Economic Analysis released its latest quarterly report for the end of 2022. It showed that the economy grew 2.9% in the fourth quarter.
Biden might want to think twice before claiming a victory. Despite the growth, fueled mainly by inflation, there are some serious warning signs the economy is headed for deep trouble. Among them is a signal not seen since 1932 during the Great Depression.
Let’s dive in and take a look at the report.
There are some glaring issues the report singles out.
Business investment grew at a measly 1.4%. Non-residential investment, which economists use as a key driver of economic growth, was up only 0.7%. Residential investments fell 26.7% due to high home prices, interest rates, and falling real incomes.
Additionally, retail inventories skyrocketed as businesses failed to sell items at current prices. Inventories make up half of GDP. Economists say companies will soon begin liquidating their stocks at discounts, hurting profits and dragging future growth.
Additionally, net exports contributed short-term to the economic gains. International trade is slowing substantially, and imports are falling quicker than exports. This shows up as an increase in GDP.
Great Depression Number is Alarming
Economists are sounding the alarm over a startling number not seen since 1932. Real disposable income fell over $1 trillion in 2022. It’s the second-largest percentage drop ever in real disposable income.
What’s driving it?
Households are depleting their savings to keep up with 40-year inflation highs after they spent their COVID “stimulus” checks from the government in 2020 and 2021. Credit card debt is exploding, and savings crashed by $1.6 trillion in 2022. As this process continues, consumer spending will continue to reduce. Consumer spending accounts for two-thirds of GDP.
Do you see the problem?
Let me express it this way… In 2022, the average family lost $6,000 in spending power. Interest rate increases caused borrowing costs to rise by $1,400. The average household lost $7,.400 in their yearly budget.
That’s a lot of money for most middle-income Americans.
Still, it gets worse. If you plan to purchase a home today, the monthly payment is 80% higher than when Biden assumed office just two years ago. That’s $9,500 every year for the same house. That’s on top of high grocery prices. More money is going out of the bank account each week for fewer bags of food, and gas prices aren’t going to drop anytime soon. In fact, they could rise again as China begins to reopen and import oil in massive quantities.
This is The Economy Biden Says Is a Win For America
Ahead of the 2024 presidential election, Democratic strategists say they have a built-in advantage regarding who voters can trust with the economy. They argue the massive spending bills that flooded the economy with trillions of dollars in cash in 2021 are a win for America. Yet, noted Democratic economists Larry Summers and Steven Rattner repeatedly warned Democrats not to pass the American Rescue Act or the Inflation Reduction Act saying the bills were at the core of the inflation crisis.
Biden and Democrats contend their policies have created millions of jobs. That’s patently false. Over 20 million people were laid off in May 2020 during the height of the COVID-19 pandemic. In 2021, millions began returning to work as states re-opened. The return to work wasn’t policy driven. It was necessity driven. The numbers wouldn’t have mattered who was president. The problem with the new narrative is that companies are laying off hundreds of thousands of workers, especially in Big Tech.
Second, Biden will say he’s successfully fighting inflation. He will take credit for inflation dropping to 6.5%. While that sounds good and is better than the 9%+ from last summer, it’s still stubbornly high.
Biden’s narrative is just that — a narrative. It’s void of the reality most Americans are facing every day. His talking points are devoid of reality. What economic gains can he really point to as a success?
It’s hard to understand how he thinks contradicting American experiences will benefit him. His approval ratings continue to hover in the low 40s, and on the economy, it ranges from the mid to high 30s.
Here’s the strategy — deflect, blame, and rinse and repeat.
The president and Democratic leaders will continue to double down on their failed policies. In the meantime, they will deflect from their record and wag their fingers at Republicans, who haven’t had a say in how Congress spends money since 2018. Even then, there was too much questionable spending.
Get ready for the demagoguery tour.
It will embolden Democrats who are dug in. The question is, will the fake messages break through with independents and Republicans?
Still, I wonder what Biden will say that could come back to haunt him and the Democrats in 18 months or ahead of the 2024 election.
The Conservative Era, Copyright 2023
