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Mounting Evidence Is Pointing To A Nightmare Scenario For The US Economy
Daily Caller ^ | April 28, 2024 10:39 AM ET | WILL KESSLER

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.


TOPICS: Business/Economy; Government; History; Politics
KEYWORDS: debt; economy; federalreserve; inflation; stagflation
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1 posted on 04/29/2024 6:00:10 AM PDT by Red Badger
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To: Red Badger

The Green Fantasy World is a Dead World


2 posted on 04/29/2024 6:04:49 AM PDT by butlerweave
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To: Red Badger

Is there a Band Wagon forming?

quoththeraven.substack.com
4 hours ago
“If Treasury Bonds hit 5%, you’re gonna see some serious shit”


3 posted on 04/29/2024 6:10:22 AM PDT by griswold3 (Truth, Beauty and Goodness. )
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To: butlerweave

But it makes bar tenders think they’re smart.


4 posted on 04/29/2024 6:15:16 AM PDT by Track9 (If you want to know about human nature, read a power tool user manual. )
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To: griswold3

We are just one failed bond auction away from disaster..................


5 posted on 04/29/2024 6:15:49 AM PDT by Red Badger (Homeless veterans camp in the streets while illegals are put up in 5 Star hotels....................)
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To: butlerweave

Americans are way too stupid to understand the economy. They believe that money supplies are endless, America is “too big to fail”, killing babies is more important , $50 an hour is a right, government is the answer and mentally ill trans are integral to society.

Unless the SHTF, Americans will never wake up.


6 posted on 04/29/2024 6:15:59 AM PDT by mikelets456
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To: Red Badger

Is it enough of a disaster that Traitorjoe’s puppetmasters and the DeepStaters will use it as an excuse to declare martial law and shred the Constitution?


7 posted on 04/29/2024 6:16:13 AM PDT by Carl Vehse
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To: Red Badger

The recent contraction of Southwest Airlines, a stalwart giant in the airline industry, is a sure barometer of what’s really going on.


8 posted on 04/29/2024 6:16:24 AM PDT by fwdude ( )
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To: Red Badger
I'm reminded of the fella who jumped off the top of the Empire State Building and was heard as he passed the half-way mark on his trip down saying........

"So far -- so good!"

That's where we're headed, except we are well beyond the halfway point.

9 posted on 04/29/2024 6:16:47 AM PDT by icclearly ( )
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To: Carl Vehse

I think they have already done that. The MSM just hasn’t reported it yet......................


10 posted on 04/29/2024 6:17:12 AM PDT by Red Badger (Homeless veterans camp in the streets while illegals are put up in 5 Star hotels....................)
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To: Red Badger

Crash the dollar.

Fund World War III.

Promote perversion as “normal”.

Open borders to illegal invasion.

Forgive student loans while veterans and taxpayers can’t afford to eat.

Start working on Digital Currency.

This is the Joe Biden Administration.

What could possibly go wrong?

Release criminals.


11 posted on 04/29/2024 6:18:56 AM PDT by SaveFerris (Luke 17:28 ... as it was in the Days of Lot; They did Eat, They Drank, They Bought, They Sold ......)
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To: fwdude

If that flying Greyhound bus, Southwest Air, can’t make a profit, then we are in deep shiite...........


12 posted on 04/29/2024 6:19:22 AM PDT by Red Badger (Homeless veterans camp in the streets while illegals are put up in 5 Star hotels....................)
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To: Red Badger

Congress should send more money to Ukraine. Maybe this will help. Maybe we are not sending enough, so it can COME BACK into the pockets of the military complex. Raising taxes... might bring the country into prosperity. I wonder if this has ever been tried!! Joe Biden could ask Hunter, he is the smartest guy he has ever met. Trust them, and TRUST the folks at CNN and MNSBC. Morning Joe;.. tell them. PRINT MORE MONEY. It’s that easy. We’ll get out of this, JOE knows. He has been at this a long time.


13 posted on 04/29/2024 6:20:45 AM PDT by rovenstinez
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To: Red Badger
...that flying Greyhound bus, Southwest Air...

Okay, that was funny! Too true.

14 posted on 04/29/2024 6:32:47 AM PDT by fwdude ( )
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To: Red Badger

Biden and his sycophants have spent a lot of time trying to convince Americans that the economy is great, the border is secure, etc. MY barometer has always been neighbors talking over the fence, and right now they’re only talking about how bad things are. Team Biden is in real trouble. Yes they’re gonna cheat, but if Trump can stay on message he’ll win bigly.


15 posted on 04/29/2024 6:34:53 AM PDT by Kharis13
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To: Red Badger
The free market solution is to adopt a hands-off approach and let the market self-correct. This means:

Reducing government spending and the budget deficit to ease inflationary pressures.

Eliminating unnecessary regulations that stifle business activity and productivity growth.

Allowing the Federal Reserve to prioritize price stability over other objectives and gradually tighten monetary policy to rein in inflation

16 posted on 04/29/2024 6:35:47 AM PDT by mjp (pro-freedom & pro-wealth $)
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To: Kharis13

I can’t speak to my neighbors over the back fence.

They speak Spanish.....................


17 posted on 04/29/2024 6:41:30 AM PDT by Red Badger (Homeless veterans camp in the streets while illegals are put up in 5 Star hotels....................)
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To: mikelets456
“ Unless the SHTF, Americans will never wake up.”

And we are past the point of no return. Interest on the debt is now a massive percentage of government spending. The only way to pay it and continue to fund the government is to borrow more. Which just creates even more interest. We are in a death spiral.

18 posted on 04/29/2024 6:56:54 AM PDT by circlecity
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To: Red Badger

If you turn the graph upside down then everything is fine.


19 posted on 04/29/2024 6:59:45 AM PDT by packagingguy
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To: SaveFerris; Red Badger

>This is the Joe Biden Administration.

No, this is the UNIPARTY. Speaker J. just gave Joe the checkbook & killed the 4th A.

I know, I know, “If we just have Trump a/o more (R)N(C), it’d be different”.


20 posted on 04/29/2024 6:59:50 AM PDT by i_robot73 (One could not count the number of *solutions*, if only govt followed\enforced the Constitution.)
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