President Biden is campaigning for re-election on a strong economy. He said recently, “Bidenomics is just another way of saying, ‘Restore the American Dream.’”
Some things look pretty good. Unemployment in August stood at just 3.8%, up a bit from July’s 3.5%. That’s 19 straight months below 4%, effectively full employment.
White House talking points include presiding “over $1.7 trillion in deficit reduction — a larger reduction than under any other President in American history.” What that means is Biden cut the deficit from the huge and irresponsible numbers under President Trump, $3.13 trillion in fiscal 2020 and $2.77 trillion in 2021. Fair enough. But the nonpartisan Congressional Budget Office projects a $1.5 trillion deficit for the current fiscal year 2023, which ends on Sept. 30.
That’s not much progress in a time of prosperity. And the national debt hit $33 trillion for the first time on Monday, double what it was a decade ago. Due to high interest rates, interest payments on the debt dig in at $633 billion for 2023.
There are other signs things aren’t right, especially for ordinary Americans. On Sept. 12, the U.S. Census Bureau clocked an 8.8% yearly drop in real median household income after taxes from 2021-22. And the poverty rate after taxes as measured by the Supplemental Poverty Measure jumped a sharp 59% to 12.4%. It noted much of that increase resulted from ending some programs from Biden’s $1.9 trillion American Rescue Plan of 2021.
But it’s that overspending that has goosed inflation. And although the rate has dropped from 6.5% in all 2022 to a 3.7% yearly rate in August, that’s still too much. The August number also was up from July’s 3.2%.
The inflation caused the Federal Reserve Board to increase the fed funds interest rate from 0% to 5.5% the past 18 months. Which in turn, according to Freddie Mac, goosed the average fixed 30-year home mortgage from 3.22% in Jan. 2022 to 7.08% by next month, sharply dropping home affordability.
The “indicators are sending conflicting information, making it very difficult to predict the performance of the economy in the near future,” says Raymond Sfeir, director of the A. Gary Anderson Center for Economic Research at Chapman University. On the positive side, he said, real personal consumption expenditure increased 2.2% in May, 2.4% in June and 3% in August compared to the same months of last year. “It accelerated, showing resilience by the consumers.”
Negatives include inflation, especially rising gas prices. According to the Auto Club, the hit at the pump in Southern California rose 52 out of the past 57 days. In Orange County on Sep. 18, the average was $6.02. And he warned that on Oct. 1 the moratorium on paying student loans ends, which will reduce consumption.
“My conclusion still is that a slowdown will occur at the beginning of 2024,” Sfeir said.
As with running up excessive personal credit card debt, the bill for the federal overspending always has to be paid. That time is now. And although Biden is not the only culprit, Bidenomics caused its share of the problem.
