Just in time for the midterms, the US economy could take a serious dive. Justin Haskins, the editorial director of The Heartland Institute and the director of Heartland’s Stopping Socialism Project, gives us details.
Every poll out there says Americans are concerned about INFLATION but Democrats would rather focus on taking your guns away and lecturing us on how we’re a RACIST country! Democrats = AMERICA LAST!
— Ronny Jackson (@RonnyJacksonTX) July 29, 2021
Haskins: The economy’s relatively slow growth is a clear indicator that the Biden administration’s economic strategy of increasing employment through government welfare and stimulus programs isn’t working as expected—which should worry policymakers, considering that the Biden administration’s plans to improve economic growth in the future also rely on this same flawed thinking.
As concerning as the second quarter GDP numbers are, however, there are good reasons to believe that things could get much, much worse over the next year. Perhaps the most important signal is that inflation has continued to drive up consumer prices. The annual growth of core personal consumption expenditures is now 3.4%, the most significant increase since 1992.
Further, the Labor Department reports that the consumer-price index increased in June by 5.4% compared to one year ago, the highest 12-month rate since August 2008. (It’s worth remembering that August 2008 was just one month prior to the start of the massive stock market crash of 2008.) Inflation is causing everyday prices to rise, making it substantially more expensive for families to put gasoline in their cars and food on the table, and in the process, it’s helping to keep economic growth from reaching levels many thought were inevitable late last year.
For months, Americans have been told high levels of inflation are “transitory” and likely to subside in late 2021 or in 2022. But many institutions are now warning consumers that inflation could last for substantially longer than originally expected, and that it might require central banks around the world to take action.
For example, Bank of America predicted in June that U.S. inflation is likely not “transitory” and could last for up to four years. The International Monetary Fund recently admitted in a report that there is “a risk that transitory pressures could become more persistent and central banks may need to take preemptive action.”
That “preemptive action” would almost certainly involve increasing interest rates and tightening up other monetary policies that have flooded marketed with cheap cash for many years. Altering monetary policy to help reduce inflation could very well be a responsible move to shore up the dollar and America’s financial system, but it would almost certainly dramatically reduce economic growth, because lending would become more expensive and loans would be harder to secure for many families…
The only hope of averting economic disaster is to put policies in place that would encourage, rather than discourage, able-bodied people to return to work, while reducing inflation-causing government spending programs. Unfortunately, it doesn’t look as though the Biden administration is interested in pursuing either course.