Bidenflation Adds Up

KEY TAKEAWAYS

• Inflation has soared to a level not seen in four decades, as Americans are paying higher prices for everyday essentials and bigger-ticket things.
• With inflation surging and wages not keeping up, it’s no wonder people have soured on the economy. Consumer sentiment has plummeted and stands 37% lower than one year ago.
• Democrats’ excessive spending helped fuel inflation, and now, despite growing fears of a recession, they want to force through more reckless spending and tax hikes that would make things worse. 

Americans are suffering through persistent and painfully high inflation. Prices have climbed steadily since President Biden took office, accelerating from 1.4% in January 2021 to a staggering 9.1% in June. Last month’s inflation – a 40-year high – came on top of 5.4% inflation last June compared to the same time in 2020. Democrats’ stimulus spending fueled this inflation, and now they are pushing more reckless spending and tax hikes despite signs the economy’s struggles are increasing.

Paying a Lot More for Things Big and Small

The last time inflation was this high was November 1981; generations of Americans have never seen prices rise so quickly. While inflation in June was severe, the cumulative price increases since President Biden took office are even worse. The price of gasoline has shot up 107.4% since January 2021, and groceries cost 14.6% more. Bigger purchases like airline tickets, new furniture, or new tires also cost families a lot more. The price of replacing a major appliance like a washing machine or refrigerator is 12.2% higher than when the president was sworn in, and new car prices are up 16%.

Inflation is wiping out the higher pay some Americans have gotten as businesses try to attract workers to fill millions of open jobs. According to the Labor Department, average weekly paychecks shrank 4.4% in June compared to a year ago. 

Consumer Sentiment Plunges

With surging prices and wages that can’t keep up, it’s harder for struggling families to get ahead. That’s leaving many Americans feeling glum about the economy. The University of Michigan reported that its consumer sentiment index fell to a record low in June. It’s down 37% from one year ago. Among small business owners surveyed by the National Federation of Independent Business, those expecting business conditions to be better in the next six months fell to a record low level in June.

Democrats chose Inflation, Next a RECESSION?

Democrats’ reckless $2 trillion stimulus bill spent the country into high inflation. They went ahead with their partisan bill despite warnings that it could set off inflationary pressures not seen in a generation. Now that high inflation is here, right on schedule.

Democrats have responded by insisting on another reckless tax and spending spree, despite more warnings signs in the economy. The economy shrank by 1.6% in the first quarter of this year, and the Federal Reserve Bank of Atlanta forecasts a 1.6% decline in gross domestic product in the second quarter. Some economists are predicting a recession by the end of the year. Producer prices have increased by double digits since December, hitting 11.3% inflation in June. This reflects more price pressure in businesses’ supply chains and potentially higher consumer prices down the line. The labor market shrank in June by more than 350,000 people, and labor force participation still has not recovered to its pre-pandemic level. Initial jobless claims have edged higher in recent weeks. To try to control runaway inflation, the Federal Reserve is expected to implement another interest rate hike of 0.75% later this month, which will make borrowing more expensive and further tamp down demand. The rapid increase in rates adds to the likelihood of a recession. Even Fed chair Jerome Powell admitted that, while a recession is not what they want to happen, “it’s certainly a possibility.”

Democrats have done enough damage with their bad policies. More reckless spending and devastating tax hikes are the last things we need.