This commentary is by Alfredo Ortiz, the president and CEO of Job Creators Network.
Markets were hammered yesterday, with the Dow Jones Industrial Average falling over 1,000 points. Markets are down again today as investors worry about stagflation — a painful economic disease of high inflation and contracting growth that the U.S. hasn’t suffered through since the 1970s.
Financial markets are off to their worst start to a year since 1939, and the economy shrank in the first quarter.
Today’s April jobs report data offers no change in this stagflation trend. Topline job growth continues at a moderate pace, with 428,000 jobs created last month, as the economy recovers what was lost during the pandemic. Yet there are still 1.2 million fewer Americans working than before the pandemic.
Other jobs report data suggest signs of labor market weakness. The labor force participation rate fell significantly last month to 62.2% as 363,000 people exited the labor market entirely. In other words, nearly as many people left the labor force last month as the number who got jobs.
Nominal average wages also grew slower than analysts’ expectations. President Joe Biden, congressional Democrats and even Federal Reserve chair Jerome Powell have trumpeted fast wage growth as a sign of economic strength.
Yet real wages, when adjusted for historic inflation that’s rising at its most rapid pace in 41 years, are significantly declining. As a result of this Biden pay cut, Americans’ living standards are falling.
Today’s jobs data doesn’t capture the impact of this week’s move by the Federal Reserve to roughly double interest rates by raising them by 50 basis points. While this move may tame inflation, it will hurt consumers, small businesses, and the overall economy by raising the cost of borrowing.
Unfortunately, Democrats’ reckless spending has left the Fed with no other choice. Even Treasury Secretary Janet Yellen admitted this week that Biden’s spending caused inflation.
The rate hike is the bill coming due for the excessive government spending that Democrats always promised would be a free lunch.
One policy change the Biden administration can immediately take to reduce inflation and boost economic growth is to end its war on domestic energy
By reducing its numerous regulations on the domestic production and transportation of oil and gas, the administration can increase supply, reduce historic gas prices that are a regressive tax on American workers and small businesses, and create new, high-paying jobs.
Instead of asking OPEC and Venezuela to produce more oil, we should drill here at home.
According to the latest JCN Foundation Small Business IQ Poll, nearly 70% of small business owners think the Biden administration isn’t doing enough to combat inflation or supply chain problems.
Eight in ten small business owners — including 77% of Democrat small business owners — support increasing domestic oil and gas production as a practical way to help tame inflation, but the administration refuses to do so.
With savings and retirement portfolios falling and inflation rising, Americans feel poorer even if their paychecks remain the same.
And if they feel poorer, they are poorer.
This so-called reverse wealth effect will hurt the economy as Americans from all income brackets cut back on discretionary spending that fuels American small businesses and the broader economy.
Once this sentiment is reflected in the labor market, the economy will officially enter stagflation.
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7 thoughts on “Opinion: On the economy, the bill has arrived for Democrats’ free lunch”
Gee, I spotted a piece on Socialist VT Digger….a letter from this fellow :”Dave Stahler Sr. of Lyndon Center, a retired Vermont businessman.” he absolutely destroyed the insane climate idiots:
“Vermont has the lowest annual greenhouse gas emissions/CO2 of any of the 50 states at only 0.1% of the total U.S. annual emissions……..Rushing to do something with so many negative consequences when our contribution to U.S. annual emissions is so small is not good governance. We can do better.”
The “Klimate Krowd” in the Legislature are all insane, indoctrinated Bobble-Heads…….VT has lowest C02 emissions of ALL states…1/10th of ONE percent. SO WHY spend hundreds and hundreds and hundres of millions over time to actually BELIEVE it will help climate, when it is impossible to change temps more than a microscopic amount anyway, from where microscopically it is right now! . Free money and Socialism go hand in hand in the VT legislative Asylum 🙂
Vermont is a microcosm of this free money. VT has always been run on “other peoples money”. That is teh Socialist credo….this will not last. VT got the largest amount, per capita, of ALL free gov’t covid money. why? several billions they will soon just “pee away” on any and all social “feel good” programs – and of course CLIMATE CHANGE…untold millions. FOR WHAT? Progressives will never be able to alter mother nature weather by even 1/2 of one degree, no matter HOW much they spend. WHY DO IT THEN? You have 4% of VT’s population that is UNION….and they have saddled the rest of the 96% VT residents with a $4 billion unfunded pension liability…(that is Let Them east Cake attitude) and if bond & stock markest keep losing it will be closer to $5 billion. And THEN? About 65% of ALL VT’s income and property taxes come from a small 20% of the VT population. What if they leave? The VT population is 45% over 65 and under 19. They don’t pay much in taxes!
The free federal BILLIONS is OVER and it will all be spent on stupid things that mean nothing…except you “feel good” after. I FEEL GOOD…because I left VT as soon as I was able. Best thing I ever did…after almost four decades total. My dream of VT is gone.
It’s time for the people of this country, to include both Democrats and Republicans, to move beyond the economy, inflation, Roe Vs Wade, the divisive and constant chant of racism, illegal immigration, crime, climate change and every other issue……..And move on to the most basic impediment preventing our problems from being intelligently and effectively addressed.
The problem is President Joe Biden……He is simply not up to the job of leading this country and tending to the problems facing the American people and beyond.
Just look at what President Biden does, doesn’t do and has to say (or attempt to say) day in and day out…….This country has a real problem and its President Biden……Our Congress must come together in a bipartisan manner and step up and get this country under control.
The Congress must move away from its fringes and toward the center and work for all America……The problems far greater than just the economy……And all Americans are feeling it.
He was chosen by the Dem/Prog elite, because of his reputation of getting everything wrong, except for his and his son and his brother’s very lucrative grifting and grafting in China, Russia, Kazakhstan and Ukraine, when he was VP and after.
All this would never have seen the light of day, if it had not been for his son forgetting to pick up his computer from the repair shop.
Willem……President Barack Obama is perhaps best qualified to judge Joe Biden capabilities based on their 8 year close working relationship and when he said: ” Don’t under estimate Joe’s ability to f……things up”.
Here it is from CBS news:
One of the President Obama’s most accurate observations of what would happen with Joe Biden in charge…….And it has taken less than a year for Biden to prove Obama’s thinking correct.
In the prior comment, I forgot to mention “Increased energy prices”
US gas prices have surged to the highest level in real terms since the financial crisis in 2008, as strong demand for LNG from buyers in Europe and Asia puts pressure on inventories.
Futures for gas delivered to Henry Hub in Louisiana are trading at almost $9/million Btu, up from just over $3 at the same point last year, and less than $3 in 2019.
This is due to Biden’s handlers shipping our LNG gas (and oil) to Europe to make the BIG bucks.
All of us are paying for the US/UK pushing for “NATO barking at the gates of Russia”, as mentioned by the Pope, during a recent interview. Just googgle.
In Europe prices are $30/million Btu, the same as Asia. See URL
Increased inflation rates,
Increased interest rates,
Increased shipping costs,
Increased materials prices, such as lithium, cobalt, titanium, aluminum, copper, fertilizers.
Increased supply chain disruptions
Most of this is due to the US, the largest economy in the world, being grossly mismanaged by woke amateurs, who deliberately did not repair the roof while the sun was shining, because they were so busy imposing THEIR disastrous, wacky, wokeness onto others
The prices of wind, solar and battery systems are about 25% higher in 2022 than in 2020, which means electricity used by heat pumps and electric vehicles will be much more expensive.
I HOPE PUC FOLKS ARE READING THIS
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