President Biden thinks our economy is “looking good.” He says he “feels good about it,” and claims that America’s economy is “stronger than any other” in the world.
But the President is wrong. Dark clouds are forming over Biden’s economy, and financial markets are signaling economic trouble ahead.
Inflation is still running at 40-year highs, and economic growth has fallen for two consecutive quarters in a row. Gas prices are down from record highs in early summer, but they are still 60% higher than the day Biden took office.
The darkest cloud over the economy is Federal Reserve Chairman Powell’s Jackson Hole speech where he essentially said he was determined to push the economy into a recession to fight inflation.
Powell dropped all talk of a soft landing and made it clear he would take “forceful and rapid steps” that will result in “slow growth” and “pain to households and businesses.” By pain, he means recession and lay-offs.
Powell’s task of curbing inflation has been complicated by Biden administration policies to pump up demand with spending, subsidies, and loan forgiveness, and to reduce supply with tax increases and regulations.
As a result, the Federal Reserve now feels forced to keep hiking interest rates for a sustained period of time, which will lead inevitably to slower growth and higher unemployment rates.
Another dark cloud is last week’s jobs report showing signs the job market is cooling. The unemployment rate increased to 3.7%, the highest jobless rate in six months.
Although the media keeps writing about a hot jobs market, cracks are starting to show. The number of full-time workers declined by 242,000, while the number of people forced to take part-time jobs jumped by 413,000. What’s more, the number of Americans working two jobs to make ends meet has increased by 712,000 in the last twelve months.
More pain is coming. Major firms including Ford, WalMart, and Wayfair have announced lay-offs, and a recent survey found that 50% of US firms are expecting to implement job cuts in the next six to twelve months.
Although Biden might be feeling good about his economy, the American people are not. His reckless spending and tax increases have driven the American economy into a deep hole and more bad times are coming.
Washington needs to stop the spending and tax increases and go back to the economic policies that have worked in the past, pro-growth policies of low taxes, less regulation, and increased production energy.
