Joe Biden did the amazing feat of inheriting a strong economy and bringing it to a standstill in nine months.
At the time the president was elected, the nation was experiencing a solid V-shaped recovery. It had been growing faster than 6%. Federal Reserve was pumping up money supply at $120 billion per monthly, while consumers had over $2.5 trillion of savings. Prices were stable and unemployment was dropping fast. The COVID vaccine was administered to 1.6 million Americans on Inauguration Day. Optimism was high and relief funds were plentiful.
As he may say, it is not hyperbole to say Biden arrived at the Oval Office with gust-force tailwinds in his back.
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Unhappily our momentum has sunk, despite all the tailwinds that persist.
The Fed continued to lavish monetary generosity (some might say recklessness), and the ongoing flow of government aid money, but growth fell to an anemic 2.2% in the third quarter. Meanwhile, the “price inflationor”, a.k.a. the price deflator, rose to 5.7%. Inflation rose to 5.7%.
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Worse, Americans seem discouraged. According to a new survey from Morning Consult, consumer sentiment slid in the 30 days ending Oct. 21, even as COVID cases plunged 37%, the S&P 500 rose 4.5% and more people entered the workforce.
Is it because people feel so down? The primary reason people are so gloomy is a significant drop in the survey’s “current buying conditions”, which reflects rising prices and goods shortages.
Pessimistic consumers tend to reduce their spending because they are less optimistic. This means that the slowdown we witnessed in the third quarter may continue.
Morning Consult isn’t an anomaly. Consumer sentiment was at shockingly low levels at the University of Michigan in its latest survey. It is now 71.70 as compared to 79 at January’s end and 81.80 one year ago. It is the same type of read we usually see during recessions. This reading is lowest since Barack Obama became president in 2011, while we were still struggling to grow.
After four years of turmoil, millions voted in favor of a political ceasefire. All of these hopes were dashed.
Consumers were generally not so depressed even during pandemic.
Let’s be crystal clear, we are not experiencing a recession. Amazingly, many Americans feel that a recession is likely. A recent CNBC poll shows 47% of the public – a plurality – expects there will be a recession next year, up 13 points from 2019 when the question was last asked. CNBC reports that “46% believe the economy would get worse over the next year,” the largest percentage of poll respondents in its 13-year history. And 79% consider the economy fair or poor.
This is a remarkable data point, considering that the unemployment rate is below 5% and companies report excellent earnings. Incomes are also rising. Is there something else going?
My belief: Americans don’t trust Joe Biden. Even voters who didn’t vote for him believed he would unify the country, which he had promised. Many people expected him to be a centrist in government and to have the ability to collaborate with Republicans for national advancement.
After four years of turmoil, millions voted in favor of a political ceasefire.
These expectations have failed. Biden, who has shown bitter partisanship since his election, has destroyed every remnant of Trump’s administration. This includes policies that helped to create a peace framework in the Middle East and controlled the border.
This country is now more divided than ever before.
The White House was expected to have some competence. The worst part is the incompetence of both President Trump and his staff. Politics
After all, Biden and nearly the entire White House and Democrat leadership, including House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Chuck Schumer, D-N.Y., are lifelong politicians. They don’t know how to run a car dealership or a restaurant; they couldn’t farm an acre of corn to save their lives.
However, they should be experts in writing legislation and counting the votes. It turns out they can’t do that, either. Last week’s barrage of ill-considered tax measures thrown up in desperation – proposals that would have long-term consequences but received zero serious debate – was irresponsible and ridiculous. Biden and Schumer, like the Keystone Cops to law enforcement are similar to Schumer, Pelosi, or Schumer to government.
The flailing attempts to move an amorphous ever-changing blob of legislation across the goal line has been embarrassing; Biden’s repeated pleas to his Your party To “save” his presidency by voting in favor of a bill which has not been written yet is an act of disgrace.
Americans are stunned by all the disorder on display and look for solutions.
While inflation is of paramount concern, the White House alternately dismisses concerns about price rises or puts them down to circumstances outside their control. Nearly every move by the administration, including the generous handouts contained in the $1.9 trillion American Rescue Plan and the president’s ill-considered vaccine mandate, has worsened the labor shortage underlying inflation. This is the lowest percentage since the 1970s, with 62% of Americans looking for work or actively seeking employment.
The latest evidence of a wage-price spiral is now evident in the Employment Cost Index, which rose 5.4% from a monthly to a quarterly basis. This was the highest level in over 20 years.
Supply chain blockages are real, but Transportation Secretary Pete Buttigieg, the administration’s point man on the issue, has been AWOL.
While the cascade of embarrassments and failures from the White House means the most damaging of their ambitions – the Green New Deal, for instance — will likely fail, it is not good news for our country.
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Americans want to feel proud of our nation. While there are many differences in our society, successful presidents have the ability to resolve those conflicts and make clear why their policies serve everyone’s best interest.
Joe Biden refuses to answer any questions and insults critics, while repeatedly turning his back on voters.
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