No one likes bad economic news, especially consumers, small businesses, and politicians looking to get reelected. But the reality is bad economic policies invariably produce bad economic results, and Biden’s policies are miserable.
If a dimming economic forecast for 2024 may be premature, big facts suggest otherwise. Biden’s economic mismanagement is likely to erase his remaining support. The only good news is a silver lining for 2025. Look at the big facts.
First, Biden’s fiscal policies – the inordinate money Democrats spent post-COVID on climate change and an ironically named “Inflation Reduction Act” – have driven inflation, interest, and national debt up, real wages, savings, and confidence down.
Biden’s 2024 budget is 55 percent higher than Trump’s 2019 budget, after record spending. The federal debt stands at $32.7 trillion, and Biden aims for $50.7 trillion by 2033. That is unsustainable. Consumers, small businesses, and markets know it.
Biden’s 2021 through 2024 spending spree, combined with cuts in US energy production, pushed inflation from 1.4 percent when Biden took office to 7 percent in 2021, 6.5 percent in 2022, and 3.2 percent today. Biden takes credit for bringing his own record inflation down – from five times Trump’s to twice Trump’s. That is not progress, it robs seniors and hardworking Americans of life-and-death resources.
Glance at interest rates, which have been raised more than 500 basis points in a year to address Biden’s wild spending, debt, energy cuts, and inflation. Interest on cars, houses, credit cards, and that federal debt, which fell in 2019 with Trump, started at 3.7 percent in January 2020, with mortgage interest at 2.68 percent.
But then came Biden, who not only pushed inflation to seven percent but – by doing so – pushed interest people to pay on credit to double what it was under Trump.
On oil and gas, Biden took America backward, from energy independence under Trump and being a net exporter to deep cuts in production, a crazy call for ending all US oil and gas production by 2035. This, when 81 percent of our power grid runs on oil and gas, and wind and solar will never get beyond 15 percent.
Net-net, Biden is killing the energy sector, consumers, seniors on fixed incomes, small businesses, and any chance for robust growth in 2024, but…there is more.
Often unspoken is the “lagged effect” of changes in interest rates by the Federal Reserve. While we face high inflation, interest, debt, dependence, low labor productivity, consumer confidence, and faith in Biden, we also face a downturn next year. Here is why.
The Financial Times recently explained. “The quantitative effects of monetary policy – both in magnitude and timing- are notoriously uncertain. That said, a central rule of thumb is that each percentage point increase in official interest rates reduces aggregate demand by one percentage point,” lagging a year or two.
Biden’s pro-inflation, anti-energy policies triggered a five-point jump (actually 525 basis points) in interest, which is likely to translate into a solid downtick in growth.
That shoe has not fallen yet, but could soon. The Financial Times explained why. In all likelihood, “The negative influence of monetary policy by 4 to 5 percent of GDP (Gross Domestic Product) is being offset …by this year’s fiscal expansion and the running-down of much of the remaining excess savings cushion,” from COVID-era federal checks.
“Next year may well be another matter… The spending of excess savings will largely be over and fiscal policy moves into restrictions of around one percent of GDP. Meanwhile the delayed effects of the last two years of monetary tightening stand to be” up to “negative 3 percent of GDP.”
In other words, on top of high inflation, interest, debt, and uncertainty, the lagged effect on demand and growth of high interest and the end of masking could lead to a noticeable drop in demand and growth a downturn in the economy.
So, what is the silver lining? There are three.
First, dropping demand and growth will, perhaps by 2025, reduce inflation further, currently still twice Trump’s level.
Second, concerns about the future may lead the Fed to start cutting rates, which with a lagged effect, may bring growth back in 2025, as people again borrow.
Finally, the mismanagement of fiscal, energy, and monetary policy by free-spending Democrats may produce a sobering-up moment, a return to fiscal conservatism, cuts, and balance under new leadership – at both ends of Pennsylvania Avenue. So, a dimming economic forecast may, after all, usher in a brighter future. Let us hope.
Robert Charles is a former Assistant Secretary of State under Colin Powell, former Reagan and Bush 41 White House staffer, attorney, and naval intelligence officer (USNR). He wrote “Narcotics and Terrorism” (2003), “Eagles and Evergreens” (2018), and is National Spokesman for AMAC.
Biden has destroyed the economy with his big lie about man made global warming.
FJB
anyone who claims there was no voter fruad shoudl have to find 81 million people who claim to have voted for Biden. It can not be done because they do not exist.
Nobody should take 2024 for granted because too many ppl vote “party” no matter how bad things are. And because of that, plus a deep hatred of Trump (actually ANY Republican candidate), Biden might win. Never discount the stupidity of the average (uninformed) voter or loyalist party member!
The only hope for America is number three. A complete change in policy and politicians. The “norm” and working across the isle is no longer an option. The old system has got to go and a new one must be born. Saving our nation has never been more important. It’s time for the socialists/Marxists/communists and RINO’s to be removed.
Most objective Article on the Economy that I have read. Shame that MSM does not do the same.
Excellent analysis. One can only hope lessons are learned by 2025!
democrats have never seen a wasted taxpayer dollar they didn’t like. Unfortunately, sometimes Republicans are no better.
HEY!! I mean, sure we have to import oil to fuel our cars and heat our homes and to……..well to have store shelves holding things rather than being bare………but look! We have huge fields of wind turbines with as much as half the turbines down for various reasons, a much higher percentage in winter weather, Oh and hey, we have acre upon acre of solar panel arrays with lifespans equal to that of field mouse……….but hey again, we have to have solar panels so as to keep our Chinese import levels high cause ya know the only affordable source for solar panels is…………yup China.
Be a glass half full kinda……..well, a glass half assed kinda guy
Meanwhile, Republicans, (the only other political party with any semblance of influence), sit on their asses with an open border and zero respect for their candidate. They deserve to be prosecuted by the same corrupt DOJ that they refuse to correct. The American taxpayer has zero respect and no representation. Plan accordingly.
Good Article.
The only reason Biden is running for president is because Trump is running he is not running to make this country better. We the people better watch this next election or there will be more the same as the last election and Joe will be back in.
Most Americans will not accept that the Biden administration’s goals for the USA are almost opposite of what they’ve been taught and have experienced during their lifetimes. Biden and company do not support freedom of choice and are pushing to reduce or limit : what you can think, believe, say; where you live and in what sort of housing; where and how you travel; what you eat; how much and forms of energy you can use; how much wealth you can accrue; how you use the medical industry. Biden and is followers want to control everyone else. And they will become extremely wealthy at the expense of the proletariat.