Posted on 04/29/2024 6:00:10 AM PDT by Red Badger
The U.S. economy is showing signs of stagflation as growth slumps down and prices continue to surge for average Americans, experts told the Daily Caller News Foundation. U.S. annual economic growth measured just 1.6% in the first quarter of 2024, following a report of persistently high inflation in March of 3.5% year-over-year. The combination of both low growth and high inflation, in conjunction with continuously high amounts of government spending and debt, has led to signs of stagflation in the U.S. economy, which wreaked havoc on U.S. consumers throughout the 1970’s, according to experts who spoke to the DCNF.
“It’s not so much that we risk stagflation as we’re already there,” E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the DCNF. “We have basically pulled forward trillions of dollars of economic growth by borrowing from the future, but that must be repaid at some point. And it is highly inefficient as well.”
Stagflation is a unique economic phenomenon that involves slow growth, high unemployment, and elevated inflation and is particularly difficult to address as solutions for one issue can exacerbate the others, according to Investopedia. The most notable example of stagflation occurred in the 1970’s, after an oil crisis.
The U.S. national debt climbed above $34 trillion for the first time at the start of 2024 and currently sits at nearly $34.6 trillion, according to the Treasury Department. The national debt has increased by around $6.8 billion since President Joe Biden first took office in January 2021.
“Stagflation is the inevitable result of Bidenomics,” Michael Faulkender, chief economist at the America First Policy Institute, told the DCNF. “When you massively increase spending, whether green subsidies or student loan forgiveness, while simultaneously reducing the ability of the economy to produce because of all the regulatory restrictions being imposed, you get reductions in growth with higher prices. If Bidenomics continues, then we should expect stagflation to continue.”
Biden has made high-spending policies part of his broader agenda, signing the $1.9 trillion American Rescue Plan in March 2021 and the $1.2 trillion Bipartisan Infrastructure Law in November 2021. The president also signed the Inflation Reduction Act in August 2022, which authorized $750 billion in new spending, with $370 billion of that dedicated to green initiatives to combat climate change.
The Biden administration’s latest plan to forgive student loans would cost an estimated $559 billion over the next ten years through various loan cancellations and interest suspensions. The president had one of his previous, more costly plans to forgive student loans struck down by the Supreme Court in June 2023.
Jai Kedia, a research fellow in the Center for Monetary and Financial Alternatives at the Cato Institute, cautioned the DCNF about assuming the U.S. was suffering from stagflation, noting that the phenomenon is usually accompanied by major supply shocks.
E.J. Antoni, Ph.D. @RealEJAntoni · Follow QT continues but there's a long way to go before we return to normalcy, and that likely won't happen w/ Powell & Co. chomping at the bit to cut rates and taper the balance sheet runoff - securities are only down 18.6% from their peak and total assets down just 17.4%:
“The news on both fronts — inflation and output — is far from ideal, but there is no reason to think that we will get stagflation from just this one report,” Kedia told the DCNF. “When stagflation last occurred in the 1970s and early 1980s, the U.S. economy had significantly different characteristics. That era was marked by severe wage inflation and strong wage contracting at unsustainably high levels, driven primarily by labor union bargaining. Businesses passed those labor costs on to consumers, and since those wage increases weren’t the result of any productivity gains, the result was inflation with little economic growth. That unique situation is (hopefully) unlikely to occur again.”
Despite recent low growth figures, gross domestic product surged in the third and fourth quarters of 2023 to 3.4% and 4.9%, respectively. Economic growth projections in those quarters included huge gains from government spending.
“Today’s report shows the American economy remains strong, with continued steady and stable growth,” the White House said in a statement following Thursday’s GDP report. “The economy has grown more since I took office than at this point in any presidential term in the last 25 years — including 3% growth over the last year — while unemployment has stayed below 4% for more than two years. But we have more work to do. Costs are too high for working families, and I am fighting to lower them.”
Top-line job growth has remained high as well, with the U.S. most recently adding a total of 303,000 nonfarm payroll positions in March with an unemployment rate of 3.9% after adding 275,000 in February. Despite persistent growth, gains have been dominated by part-time jobs and employment from the government.
“In general, high inflation and low output occur as a result of severe supply shocks,” Kedia told the DCNF. “The Fed does not have much control over such shocks, and it’s usually best to avoid making drastic monetary policy decisions on the basis of such shocks. It’s too early to tell if such a shock has occurred over the past month, so it is unclear whether output has gone down due to supply constraints, or whether the increased borrowing costs have finally cut down on people’s consumption, or whether this was a noisy data observation.”
In an effort to reduce the rate of inflation, the Federal Reserve has already raised its federal funds rate to a range of 5.25% and 5.50%, the highest in 23 years, with the last hike being in July 2023. At the Federal Open Market Committee’s (FOMC) most recent meeting in March, the majority of Fed governors kept their estimate from December that there would be three rate cuts by the end of 2024.
“There is absolutely no reason for the Fed to cut rates this year besides the obvious political motivation,” Antoni told the DCNF. “Recall that during the first three years of the Trump presidency, the Fed was raising rates and selling off the balance sheet, also called ‘quantitative tightening.’ The reasoning for tighter monetary policy was fast labor market growth and inflation fears. Today, those indicators look even worse according to the Fed’s own thinking: job growth has been much faster according to official government metrics, and inflation remains far in excess of the 2.0% target, with inflation expectations completely unanchored. They should be talking about raising rates, not cutting them.”
A majority of investors now predict that there won’t be a rate cut until the FOMC’s September meeting as inflation remains persistent, according to CME Group’s FedWatch Tool.
Business leaders are cautious about the current state of the economy, with JPMorgan Chase CEO Jamie Dimon saying on Friday that he is hopeful that the U.S. can bring down inflation and maintain growth, but he is worried about the possibility of stagflation, according to The Associated Press.
“Sadly, the indicators point to stagflation for quite some time because the excessive government spending that caused this problem isn’t letting up,” Antoni told the DCNF.
The White House deferred the DCNF to previous statements.
Leave it to the (R)N(C) to, again, nibble around the edges w/ this “We can run this (illegal, BIG) govt *better*” mentality
- End the Fed (restore A1S10)
- Reduce govt to its LEGAL (Const.) size/scope
Your ‘Point1’ would auto-realize. It’ll be hard/brutal & even those on the (R) will likely cry, “HELP ME, Uncle Sugar”
One of my favorites quips.
Umm, Duh
Told some financial twerps that they were about to experience stagflation about 2 years ago
They were stumped - What’s that? they said
You’ll find out kiddies
Jimmah Carter 2.0
5.56mm
Only way to let Trump win is to saddle him with a 1929 crash and depression—turn him into Herbert Hoover and use him to secure a new Democrat total power steal for 50 years.
Even when we are flat broke and we must sell our land to China to pay interest on debt—we will still send Billions to Ukraine and Israel. Rich citizens of the world must be well fed in their mansions.
Definitely Uniparty
I don’t think one man can overcome the system they’ve spent decades building - probably since GHWB if not before
“Only way to let Trump win is to saddle him with a 1929 crash and depression—turn him into Herbert Hoover and use him to secure a new Democrat total power steal for 50 years.”
Already the DS plan.
“Only way to let Trump win is to saddle him with a 1929 crash and depression—turn him into Herbert Hoover and use him to secure a new Democrat total power steal for 50 years.”
Already the DS plan.
I got laughed at for saying this.
They won’t be laughing when their money’s no good any more................
Yeah, and our government is doing this on purpose.
We got rich rebuilding the world after world war ii. Once that was completed we started living on the national credit card just like a rich family where Dad has lost his job.
That is, this has been a very long time coming and, frankly, it took a lot longer than a lot of people thought it would. We are in for some very interesting times. And it’s not just the United states.
And it’s not a Democrat or a Republican problem. You can blame the politicians in all the countries for it but, ultimately, you need to blame the voters that elected them. Anyone who told the voters the truth had no chance of getting elected. It’s just the way it works. People vote their wallets.
This sort of thing is just more evidence for why Jesus died for us. And thank God it was followed up by his resurrection.
“If Treasury Bonds hit 5%, you’re gonna see some serious shit”
_________________________
my buddy just told me this last Friday!
I could not read this; I was too busy being a women for a few minutes then a man then a woman then a man. In between changing sexes with my mind, I used it to change the weather and the future. Oh oh, I almost forgot, I also made sure everyone understands that skin color is everything and Jews are the bad guys and Hamas is so sweet they will hold it for me when I pee (during the times I am a man).
Remember Freepers, Barry says “Go Cloward-Piven” so make sure you are on board. And remember black Freepers, you need to get on the “I get to screw Kim Kardashian” list so she can find you when it’s your turn because she going to get to you eventually.
Amerika!
Every big problem America faces has its origin in Washington, D.C. If left to its own devices Washington believes the answer to every problem is more government, more spending, more regulation. The only solution to America’s problems is less Washington, much less. Less government has to be the mantra for every candidate, and they must be held to account to see that it’s adhered to. Washington has become a life threatening malignancy for America, and time is short if we are to save the patient.
Well I remember the stagflation of the late 1970s and early 1980s. We should be prepared for double digit interest rates and even higher prices at the grocery store and gas pump.
(From the article):" The U.S. economy is showing signs of stagflation as growth slumps down and prices continue to surge for average Americans,
experts told the Daily Caller News Foundation.
U.S. annual economic growth measured just 1.6% in the first quarter of 2024,
following a report of persistently high inflation in March of 3.5% year-over-year.
The combination of both low growth and high inflation, in conjunction with continuously high amounts of government spending and debt,
has led to signs of stagflation in the U.S. economy, which wreaked havoc on U.S. consumers throughout the 1970’s, according to experts who spoke to the DCNF.
“It’s not so much that we risk stagflation as we’re already there,” E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the DCNF.
“We have basically pulled forward trillions of dollars of economic growth by borrowing from the future,
but that must be repaid at some point. And it is highly inefficient as well.”
”Stagflation is a unique economic phenomenon that involves slow growth, high unemployment, and elevated inflation and
is particularly difficult to address as solutions for one issue can exacerbate the others, according to Investopedia.(Emphasis Mine)
The most notable example of stagflation occurred in the 1970’s, after an oil crisis."
”The U.S. national debt climbed above $34 trillion for the first time at the start of 2024 and currently sits at nearly $34.6 trillion, according to the Treasury Department.
The national debt has increased by around $6.8 billion since President Joe Biden first took office in January 2021. “
”“Stagflation is the inevitable result of Bidenomics,” Michael Faulkender, chief economist at the America First Policy Institute, told the DCNF.
“When you massively increase spending, whether green subsidies or student loan forgiveness,
while simultaneously reducing the ability of the economy to produce because of all the regulatory restrictions being imposed,
you get reductions in growth with higher prices.
If Bidenomics continues, then we should expect stagflation to continue.” “
“.... America is “too big to fail”
The bigger they are, the harder they fall.
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