We’re not in a recession despite two quarters of shrinking Gross Domestic Product, President Joe Biden argues, because the job market “remains historically strong.” Sorry, Joe: The job market is historically screwed up.
Yes, unemployment’s at 3.6% — but millions of working-age folks have left the labor force, so don’t count in the rate. That’s a central reason the jobs market is so tight that many companies are finding it impossible to hire, even if they offer more pay — which makes it a lot harder for those companies to grow.
And the economy is only now recovering all the jobs lost amid the pandemic. Biden’s brags about record job creation ignore the fact that employment (and growth) should have boomed far more. This is weakness, not strength.
No, it’s not Biden’s fault that the labor-force-participation rate dropped nearly four percentage points in the pandemic. But he and his team don’t talk about why it has only recovered about half the lost ground.
One clear villain is his much-vaunted American Recovery Act, the huge spending bill passed with only Democratic votes 15 months ago: It extended jobless benefits (and also welfare ones, from food stamps to Medicaid) when the economy was starting to roar back from COVID, making it easier for people to stay out of work despite rising opportunity.
And a good chunk of people who go jobless for long periods never return to work: A lot of Americans are retiring early.
Plus, while official jobless rates are still low, the ranks of those staying on unemployment are now growing, even as new benefit applications edge up. If those trends don’t reverse, unemployment will soon edge up — or roar up, if growth continues negative.
Biden, Fed chief Jerome Powell and Treasury Secretary Janet Yellen also cite still-rising consumer spending as reason to think GDP will soon start growing again. But they ignore the causes: Savings soared during COVID, so much current consumer spending is just a temporary bump of delayed outlays. Plus, skyrocketing prices force people to spend more just to keep up — most of the June rise in consumer spending was for basic needs like energy, housing and utilities (plus international travel, which goes to that post-COVID splurge).
In short, no reason for optimism on real growth.
Oh, and Biden, Powell and Yellen are the same folks who spent most of 2021 claiming inflation was “transitory”: Their record of figuring out this economy is terrible.
Worse yet, Democrats are now looking to pour fuel on the economic fire, with a fresh version of the Build Back Better bill. They call it an anti-inflation plan, but it’s the same mix of (growth-depressing) tax hikes and (inflationary) new federal spending they’ve been pushing since Biden took office.
Bottom line: Team Biden is offering more of the exact same poison that’s brought back the dreaded stagflation combo for the first time since the 1970s, and is only pretending their “medicine” has anything to do with what’s actually ailing the nation.
They’ve put the economy in a ditch, and they’re still digging.