“What you’re seeing is enormous growth in the country,” President Joe Biden told the press today.
Everywhere you look these days, from traditional to social media, one subject in particular seems to be our new national preoccupation:
Inflation. The rising cost of everything we buy from new houses to cornflakes. The skyrocketing cost of fuel, which is making everything more expensive to produce and ship. Supply chain delays, uncertainties in the global marketplace caused by the ongoing Russian invasion of Ukraine, among many other sub-factors: All of the above and more is putting a serious hurt on U.S. economic recovery prospects, present and future.
None of this is being lost on American consumers. Even the wealthy don’t like paying more for everything. No one does.
The news today that, “The U.S. GDP fell at a 1.4% pace to start the year as pandemic recovery takes a hit,” wasn’t even met with surprise, but rather a grim resignation.
“Tell us something we don’t know,” is the general consensus from the working classes who have been feeling most acutely the pinch of rising prices.
There is more than one underlying cause for our increasingly grim financial outlook; it’s rarely ever only one thing. Complex outcomes- like an economy which has gone from robust to the brink of recession in an eye-blink- almost always have more than one cause. One of the main drivers of our current predicament has certainly been the Covid19 pandemic and various mitigation measures deemed prudent to limit the spread.
As Covid19 fades from the forefront, hopefully heading towards a mild, endemic sunset, the world has been left with myriad financial problems which did not exist two years ago.
Economic experts are already bandying about words like “recession” as if it’s a foregone conclusion.
And indeed, by almost every metric, U.S. consumers and the working class are facing a tough economy which is getting worse. Whatever the numbers say, however much communities have recovered from various levels and lengths of shut-downs and closures, U.S. consumers know the truth.
They can see it every time they fill up their tanks or complete their weekly grocery shopping; everything is more expensive, and not just a little bit more. It’s all well and good for economists to put a brave face on things by averaging together those goods which have increased significantly in price with those goods which haven’t.
Consumers won’t be fooled. Most households buy the same groceries and perishables week after week, month after month. With slight variations, most grocery bills tend to be fairly static unless a household loses or gains a member.
What consumers are seeing now at the grocery store is unprecedented in most people’s lifetimes: Prices higher by $1, $2, $3, even $4 dollars. And it isn’t just a few items which have increased: Almost everything has increased- substantially. Together, it is adding up.
That is to say nothing of other goods above and beyond a household’s normal monthly operating budget. The cost of used cars has inflated 30% and more; new cars have gone up almost as much- if you can find either.
It costs more to get a mortgage right now; it costs more to buy a house. It costs even more- much more- to build a house. Renters are hardly faring better, the cost of leasing a house or apartment having increased by a whopping 40% in some places.
Some households nervously eyeing the across-the-board increases are already turning to credit cards and taking on other debts to make ends meet. Most consumers are looking for expenditures to cut, which has left even streaming service behemoth Netflix facing at a drop in subscribers with more expected to come.
Former Netflix subscribers were recently treated to this abject appeal: “(Crying face) Customer, give us another chance? We’ve got thousands of new TV shows and movies.”
Other subscription services including Headspace, Rent the Runway, and Hello Fresh are losing marketshare also as Americans tighten their belts.
Watching prices continue to rise on everything they buy, American consumers are confronting a reality in which there may be no help coming. As in, prices will continue to rise, non-commensurate with income, and working class households will fall by the millions down the socioeconomic ladder.
The burning question on everyone’s mind: Is what’s coming enough to gut the middle class and the aspiring middle class?
Luckily for Americans, President Joe Biden had a bit of good news to share with the press today when asked about the current state of the economy.
“Sir, how concerned are you about a recession given the GDP report today showed a contraction of 1.4 percent in the first quarter?” Biden was asked at press conference during a Q & A session after the President’s statement on Ukraine.
“Well, I’m not concerned about a recession,” President Biden answered, confidently.
“I mean, you’re always concerned about a recession. But the GDP fall of 1.4 percent, here’s the deal,” Biden told the press . “We also- the last quarter consumer spending and business investment and residential investment increased at significant rates, both for leisure as well as hard products, number one.”
“Number two, the unemployment is the lowest rate since 1970,” the President added. “A record 4.5 million business were created last year.”
“We’re in a situation where we, you know, have a very different view than Senator Scott and Republicans, who want to raise taxes on the middle class families and want to include half of small business owners in that,” Mr. Biden continued.
“So, I think what you’re seeing is enormous growth in the country, that is affected by everything from Covid and the Covid blockages that occurred along the way,” Biden said. “Now, you always have to take a look, and no one is predicting a recession now, they’re predicting- some are predicting there may be a recession in 2023.”
“I’m concerned about it, but I know one thing, that, you know, if our Republican friends are really interested in doing something about dealing with the economic growth, they should help us continue lower the deficit which we’ve done last year over $350 billion dollars,” Biden noted before adding. “They should be willing to work with us to have a tax code that is actually one that works and everybody pays their fair share and they should be in a position where you shouldn’t be raising taxes on middle class folks you should be raising taxes on people who everyone acknowledges, even the vast majority of Republicans, aren’t paying their fair share.”
“I’ve said it a hundred times, you have, you know, 15 major corporations of the fortune 500 companies made 40 billion dollars last year didn’t pay a single penny,” the President concluded. “No one under our proposal making under $400,000 will see a penny in their taxes go up, not one penny.”
Neither President Joe Biden nor Congressional Democrats are taking accusations that their policies are causing inflation lightly.
On Capitol Hill, Congressional Democrats are busily drafting legislation that would require the Federal Trade Commission to pursue charges leveled by Democratic Party officials that oil and gas companies are price gouging and profiteering.
“Democrats are moving forward with forceful action that will stop and hold accountable oil and gas companies for profiteering and manipulating markets,” said House Speaker Nancy Pelosi of the legislation.
While these actions and Biden’s appeal to Republicans aren’t likely to offer U.S. consumers any short-term relief, a combination of factors are responsible for the current state of the economy.
Only a combination of factors, and a whole-of-government approach like the one championed by the Biden Administration, are likely to stop America’s slide into recession and GDP contraction.
(contributing writer, Brooke Bell)