In recent years, wages have gone up; hundreds of thousands
of American jobs have been added; unemployment fell; the nation’s Gross
Domestic Product (GDP) is growing better than other developed countries,
according to the International Monetary Fund; the stock market is booming; and
inflation has dropped substantially, and even mortgage rates have stabilized to
a more typical level.
Nevertheless, Americans are skeptical, if not angry; just 35%
approve Biden’s handling of the economy.
Again, GDP is up 3.3%. The Dow Jones Industrial Average topped
38,000 (on May 3, it closed at 38,675.68 – about 24% better than when Biden was
inaugurated on Jan. 20, 2021, when it closed at 31,186.20). and the S&P 500
returned 26% including dividends in 2023, reported Goldman Sachs – more than
double the average annual return since 1986.
“The economy is more than pretty good. It’s VERY good,” says
Bob Bruno, a Professor of Labor and Employment Relations at the University of
Illinois. “Consider that union members got 6.3% wage increases in the past year,
the highest since 2001. Non-union got 4.1%.”
The intensely even-handed Associated Press agreed, reporting,
“The U.S. economy is rock solid.”
Economist Frank Manzo IV of the Illinois Economic Policy
Institute echoes their judgments.
“The U.S. economy is robust and humming,” he says. “Unemployment
has been below 4% for over two years, payrolls have increased by an average of
more than 200,000 jobs each month for the past year, the S&P 500 is up 33%
since Biden’s inauguration, and Gross Domestic Product has grown faster than
most economists predicted.
“While there are headwinds and cracks starting to form, the
probability of a recession occurring in the next 12 months is generally pegged
at around 30% or so,” he continues. “The biggest reason for optimism for the
overall economy is the large increase in wealth that households have accrued – and
can tap into. U.S. households now have about $150 trillion in wealth, which has
grown by 34% in the last four years. The recent increase in immigration has
also strengthened both the labor market and entrepreneurship, boosting
employment growth by about 100,000 jobs per month.”
JOBS & PAY
Last month, more than 300,000 jobs were (experts predicted a
gain of 214,000) – meaning about 15 million jobs have been added since Biden’s
term started).
Last years, ended with a 3.7% jobless rate, with wages
having increased 4.1%, according to the national Economic Policy Institute.
INFLATION
Year to year, the Consumer Price Index this spring showed
food at home was up 1.2% and gasoline was up 2.2%, nationally and in the
Midwest.
Mortgage rates – which skyrocketed to 18% during the Reagan
administration in the 1980s – are now below 8%, according to U.S. News’ Erika
Giovanetti, who wrote, “While today’s mortgage rates are high compared with
just a few years ago, they’re actually quite typical from a historical
standpoint.”
Two years ago, inflation was about 9%; now it’s about 3% (See
chart).
“Inflation in the U.S. has fallen as quickly as it shot up,”
Manzo says. “It remains a global problem, with rates of inflation as high in
countries like Canada, Australia, the United Kingdom, and Japan as it is in the
United States. Inflation also remains over 4% in Mexico.
According to The Economist magazine, since the end of 2019
the U.S. economy has grown about 8%, while the European Union has grown about
3%, Japan 1%, and Britain not at all. Also, economic analyst Steven Rattner and
economist Brendan Duke reported that entrepreneurship in the U.S. is booming,
with 5.2 million “likely employer” business applications filed between January
2021 and December 2023, more than a 33% increase over those filed between 2017
and 2019.
Inflation is worldwide, and no U.S. President has control
globally. The U.S. annual inflation rate is up 2.8% over the year, the CPI said
in March, compared to the European Union’s 3.1%, Japan’s 3.21% and the United
Kingdom’s 3.25 – much less Turkey’s 68% and Venezuela’s almost 200%.
“I’m not sure inflation is really a problem in the U.S.,”
Bruno says. “Consumers and employers have largely shook higher prices off.
Interest rates are a drag but still, growth continues.”
Before Biden took office, the Federal Reserve started
“quantitative easing” (buying a lot of mortgage bonds and government debt); the
Trump administration and the 116th Congress spent trillions in
reaction to the COVID pandemic, increasing the budget deficit; and housing
costs ballooned 14.6% from mid-2020 to early 2021.
“You put that together and it is challenging to make the
case that there would be no inflation,” said Campbell Harvey, a Duke University
finance professor. “But again, we just don't know the counterfactual” [ – a
psychological concept involving the tendency to conjure alternatives to events
that have already happened].
Indeed, before Trump left office, nonfarm employment had
fallen by 1.4 million jobs in March of 2020 and another 20.5 million the next
month; joblessness was at 6.3%; GDP was down 3.5%.
“Inflation was driven by supply-chain shocks associated with
the pandemic and global wars – not increases in consumer demand or worker
wages. Historically, inflation has been linked to war and conflict. That’s
because governments directly involved issue more currency and borrow to finance
the wars, demand shifts and the supply chain has to adjust which drives up
prices, and war-torn countries produce fewer goods and services. We have major
wars right now with the Russian invasion of Ukraine and the war in Palestine.
Ukraine, for example, is a major producer of agricultural products, like wheat
and corn—which has driven up food prices.”
2/3 OF US ARE DISSATISFIED.
The 35% of U.S. adults approving of Biden’s handling the
economy is up slightly, according to an Associated Press/NORC Center for Public
Affairs Research, which said the same percentage sees the national economy as
good.
“Economic and consumer sentiment has become more politicized
than ever before,” Manzo says. “When the Presidency flips, people who identify
with the losing party go from being optimistic about the economy to thinking
the sky is falling. With that said, the primary concern is about inflation—and
specifically the price level, not the rate of change. Consumers are seeing food
prices rising by 25% and their homeowners insurance and car insurance premiums
doubling, which has negative impacted their outlook.”
FLOODED BY A FIREHOSE OF LIES, DISASTER LOOMS
If the economy’s good, why’s the mood bad? Consider the
outrageous rhetoric coming from Trump.
At a Georgia rally in March, the presumptive GOP
presidential nominee said, “Inflation wouldn’t have happened” if he’d been
re-elected in 2020, ignoring the after-effects of the pandemic.
He’s called the United States a “commercial wasteland,” a “cesspool,”
a “disaster” and claimed, “Under Biden we have a three-year inflation rate of
almost 50%. Under me you had no inflation.”
If voters accept the hogwash, a second Trump administration
could spell economic disaster, with the ex-President promising to cut the labor
supply by deporting immigrants (even those here legally); devalue the dollar,
launch tariffs of at least 10% (which, since tariffs are basically a tax on
imports, are passed along to consumers, who pay more), and strip the Federal
Reserve of its independence (according to the Wall Street Journal). Plus, returning
him to the Oval Office could revive the chaos from before, which will shake
investor and consumer confidence.
For all the facts at hand and the dangers ahead, Trump’s
political handmaidens, such as Central Illinois’ Congressman, U.S. Rep. Darin
LaHood (R-Peoria)m echo Trump’s lies. Darin LaHood commented, “By every
measure, our country was better off with President Trump’s leadership in the
White House.”
THE REAL CULPRIT: PRICE GOUGING
Asked whether public discontent stems from grassroots
expectations, misinformation or something else, Bruno says, “Think post-COVID
hangover and the initial sharp spike of inflation in basic goods.”
The real reason groceries and gas cost what they do,
according to AFL-CIO President Liz Shuler, is “greedflation.
“Corporations used the market chaos of the pandemic as an
excuse to price-gouge working families to pad their profits,” Shuler said. “Even
as supply chains returned to normal, corporate greed drove 53% of inflation for
the second half of last year.”
Manzo agrees.
“There is some evidence for the price-gouging theory,” he
says. “Corporate profits after taxes have increased by about $1 trillion since
prior to the pandemic, growing nearly 50%. That’s much faster than the 21%
total rise in inflation since January 2020. Corporations saw their profits rise
substantially in 2021 and 2022, and instead of cutting prices as their input
costs decreased and passing it onto the consumer, they have largely decided to
keep their prices high to in order to retain high profit margins and satisfy
shareholders.”
In fact, corporate profits are breaking records, reaching an
all-time high last year: $2.8 trillion, according to the Commerce Dept.
A few examples of 2023 profits, according to
Macrotrends.net: Albertson’s grocery chain $21 billion, Apple $100 billion, Nike
$22 billion, Verizon $79 billion, and Walmart $155 billion.
Economist and former Labor Secretary Robert Reich said, “The
structural driver of inflation [is] the concentration of the American economy
in the hands of a few corporate giants with the power to raise prices,”
IN HINDSIGHT, BIDEN INVESTED IN THE COUNTRY.
In “free market” economies – especially one like America’s,
still operating after years of Republican deregulation – government has little
say in product pricing. However, under this system, Biden didn’t upend the
economy but skillfully used politics. Instead of exaggerating or alienating Congressional
opponents (much less his own advisers), like his predecessor, the President worked
with Republicans and ensured bipartisan government investments in the nation to
the tune of $4.2 trillion, including the American Rescue Plan, the Bipartisan
Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act.