The Economics and Political Science Room
We are certainly flirting with stagflation, but are we there yet? Issues and Insights says yes.
Welcome To Stagflation
When it comes to the economy, Democrats like to say it’s unfair to judge a president by his first year in office. Very well. President Biden is now in his second year and now we have the statistical verdict of his economic stewardship rendered by the first-quarter drop in GDP. Stagflation, anyone?
It may well be that the first quarter’s annual GDP growth of -1.4% marks not just the beginning of a period of low or no growth accompanied by inflation, but also the return to the stagflation that ruined the decade of the 1970s and helped destroy the presidency of Jimmy Carter.
And no, you can’t blame Donald Trump anymore for things that go wrong. The economic disasters piling up are now on the progressive Democrats’ tab. They broke it, they bought it.
Biden immediately spun the bad GDP news as due to “technical factors,” including a slowdown in government spending and a decline in net exports, which both contributed to the GDP drop.
“What you’re seeing is enormous growth in the country, that was affected by everything from COVID, and the COVID blockages that occurred along the way,” Biden said, after the Commerce Department delivered the bad news.
“No one is predicting a recession now, they are, some are predicting a recession in 2023. I’m concerned about it,” he said.
“But I know one thing, if our Republican friends are really interested in doing something about dealing with economic growth, they should help us continue to lower the deficit,” Biden added, saying he wants “a tax code that is actually one that works.”
Biden styling himself as some sort of fiscal conservative is bizarre.
His 2023 budget plan includes massive new spending and enormous annual deficits, and hits American families with a $2.5 trillion tax hike, with promises of more to come.Just this week, Biden proposed a “student loan forgiveness” plan that would stick American taxpayers with $1.6 trillion in new debt — a massive tax hike in itself that will force middle-class taxpayers to foot the bill for wealthy parents’ kids to go to college.
All this spending, supply-chain disruption, and renewed regulation of the economy has sent inflation soaring into the stratosphere. Consumer prices surged 8.5% in March from a year earlier, the biggest jump in over 40 years, while wages have grown just 5.6% during that time. That yields a decline in inflation-adjusted wages of 2.7%, a disaster for working Americans. As yet, there’s no end in sight.
So maybe the “unexpected” first quarter’s GDP drop is merely a downpayment on an increasingly ugly economic future.
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Originally Posted by Peter1469
