Joe Biden keeps bragging about his “economic plan working.” Now, it’s not even clear what that “plan” entails — except perhaps everything going up in price under Biden. But if “working” means crushing the American people, it certainly has been doing that.
Economic growth is slowing, residential investment is in the sewer because Americans can no longer afford the higher cost of the home, plus the high interest rates, when their real wages are already falling. The labor participation rate is still lower than before the pandemic
But perhaps most troubling is the GDP report showing the massive drop in real disposable income, which fell over $1 trillion last year and is the second-largest drop since 1932, the worst year of the Great Depression, Heritage economist E.J. Antoni said.
— EJ Antoni (@RealEJAntoni) January 26, 2023
To keep up with inflation, consumers are depleting their savings and burning through the “stimulus” checks they received during 2020 and 2021. Credit card debt continues growing, while savings plummeted $1.6 trillion last year, falling below 2009 levels.
As consumers continue depleting cash reserves and borrowing costs are rising, the growth in consumer spending will keep slowing. Since that accounts for roughly two-thirds of GDP, this doesn’t bode well for the economy.
Just how much pain is the consumer feeling? The average family has lost about $6,000 in annual purchasing power under Biden because prices have risen so much faster than wages. Higher interest rates have increased annual borrowing costs by $1,400, so that the average family effectively has $7,400 less in their annual budget.
But that’s just the average. Someone trying to buy a median priced home today will have a monthly mortgage payment that is 80 percent higher than when Biden took office. That means spending an extra $9,500 a year for the same house. It’s no wonder people are financially strapped and taking on second or third jobs in this economy.
The problem on top of that is the Biden team doesn’t want to take the necessary steps to reel things back in, like stopping the excessive spending. Instead, he just lies about the facts and redefines what being in a recession is, so he can claim we aren’t in one already. The Biden team doesn’t even want to talk about negotiating the debt ceiling, to stop the crazy spending. This means that Joe’s “economic plan” is only about making things worse.