Biden Says He’s Got Inflation Under Control but the Man on the Street Fears a Second Great Depression

Posted on Wednesday, October 5, 2022
by AMAC, John Grimaldi

WASHINGTON, DC, Oct 5 — Inflation is easy; recession is hard; and “stagflation” can be even harder for all of us. We’ve all felt the impact of the Biden inflationary cycle. It’s simple: the prices of everything you need — including the necessities of life — rise and rise again. Eventually, the nation falls into a recession.  In fact, some experts tell us we are already in a recession. But it’s not official until the National Bureau of Economic Research [NBER] says so.

USA Today explains “A recession isn’t determined by a negative quarter of Gross Domestic Product [GDP] or even two for that matter. Rather, it’s a significant decline in economic activity resulting from several factors, including high unemployment, a slowdown of goods produced and sold, and wages falling in addition to negative GDP readings.” 

However, Jim Reid, Managing Director and Head of Global Fundamental Credit Strategy at Deutsche Bank, says “We still think a recession is almost a slam dunk over the next 12 months but want to see more evidence of employment rolling over before we would call the current U.S. environment a recession.” Is that a bad thing? Not necessarily. Economists will tell you that we need a recession in order to see a decrease in consumer prices.

And then there is something called “stagflation.” The Harvard Business School refers to stagflation as “a nightmare scenario.” According to the Harvard Business Review, “What stands between a recession with above-target inflation and ‘stagflation’ is the Fed. If the central bank has the resolve to keep monetary policy tight despite recession, there is every chance that inflation can be wrought from the system. That requires significant strength and independence, as politicians, investors, and the public would push for rate cuts.” 

In fact, the Fed has already begun to “aggressively” raise interest rates in order to check inflation. It has raised the rate three times to three and three and a half percent, so far, and has indicated that it is likely the rate will go up to about 4.4 percent by year’s end and to 4.6 percent in 2023. 

These moves have increased the likelihood of a recession if we are not already in one, says the Economic Policy Institute. They tell us that a “common argument runs that inflation harms everybody in the economy, but only those who lose their job are harmed by recession. This is the opposite of truth. A recession directly reduces economy-wide incomes while inflation does not.”

Here’s some food for thought from Senator Mike Crapo [R-ID]: “In August, consumer prices rose 8.3 percent relative to a year earlier, rising higher and faster than economists predicted and more than double the historic long-run average of 3.3 percent. The Biden Administration’s inflationary policies have led to an average consumer price inflation rate of 6.1 percent during his term in office, more than triple the inflation average over the four years prior to Biden taking office, and far above the 1.4 percent he inherited in January 2021. Overall prices have risen 13.2 percent since the President took office. 

As bad as inflation, recession and stagflation might be, there is a fourth, unspeakable economic danger; it’s called a depression. It occurred only once in the history of the U.S., between the years of 1929 and 1941; it was called the Great Depression. No serious economist is likely to suggest we are headed for another Great Depression but recent polling shows that a majority of Americans are concerned about that possibility. A new survey by the pollsters at Rasmussen Reports found that “57% of American Adults believe it’s likely that, over the next few years, the United States will enter a 1930s-like Depression, including 21% who think a depression is very likely. Thirty-two percent (32%) don’t think a depression is likely, and another 12% are not sure. These findings haven’t changed much since May, when 55% said a depression was likely in the next few years.”

Bob Carlstrom, president of AMAC Action, the advocacy arm of the Association of Mature American Citizens, says “This November, Americans have an opportunity on election day to change the economic course that Biden and his congressional allies are taking our Nation. The negative outlook about the prospects of a deep recession or even a depression are clearly a reason for a change in the direction the current national political leadership is taking this country.”