Suddenly, the experts are insisting a recession is on the way after a full year of telling us the economy was breaking records and they’re looking for someone to blame. Apparently, that someone is you for getting a job and demanding better pay, pay no attention to their failed policies or the man in the White House.
Barely a year ago, President Joseph R. Biden, Jr. took office on an unbridled wave of establishment enthusiasm and optimism. The mean, unfit, and corrupt monster that was President Trump had been vanquished, the adults were back in charge, and the American people plus the world at large could look forward to a return to normalcy, renewed prosperity, international peace, and security, or at least so the story went. At the time, bold claims were made on just about every issue. The coronavirus pandemic would end, thanks to vaccines Biden could take credit for and a return to following the trademarked science. The international community, both our allies and our adversaries, would treat us with renewed respect, for America was back. They told us so many times. The President himself actually repeated the phrase twice in the same speech after castigating his predecessor for “abuse,” “America is back. America is back.” Women, minorities, and other disadvantaged groups would have new opportunities for equality and the newfound “equity,” craze for the racists and white nationalists had been routed. The border would no longer be defined by heartbreaking stories about kids in cages or migrants dying while crossing because all would be welcomed and none of this had any downside at all. The economy would flourish, even as we tackled extraordinarily difficult issues like global warming, thanks to a renewed commitment to government spending and expert management. With the experienced President Biden at the helm, along with his team of equally experienced experts, there was nothing we could not achieve together.
It was a nice fantasy for a while, but of course none of this has actually happened, not even close. Instead, America, if not the entire world, is in a far worse place in less than fifteen months by almost every conceivable metric. Perhaps nothing is more illustrative of this phenomenon than the story they desperately tried to sell us on the economy. Shortly after President Biden took office in January 2021, the experts were anticipating an economic boom, literally writing articles titled “Anticipating 2021 Boom,” to quote a headline from the Associated Press. They set the stage by claiming the nation was set up for success, literally. “As bad as 2020 was, it’s set the nation up for what economists believe will be a very strong rebound. Many project a growth rate of 5% or more in the current quarter or more, with 9% growth the headline in some forecasts. For all of 2021, economists are forecasting the GDP could grow by 6%. That would be the fastest annual GDP growth since the economy expanded 7.2% in 1984 when Ronald Reagan was president.”
They quoted Sung Won Sohn, a finance and economics professor at Loyola Marymount University in Los Angeles. “You have massive government stimulus, low interest rates from the Fed and the vaccine supply is growing. The economy is beginning to fire on all cylinders.” They quoted Gregory Daco, chief economist at Oxford Economics, who had revised his forecast upward based on the mere anticipation of President Biden’s looming $1.9 trillion stimulus plan. “We anticipate a summer mini-boom in activity, juiced up by reduced virus transmission, increased vaccine diffusion and generous fiscal stimulus,” he said. A month later, Mr. Daco was equally bullish, claiming “The key engine of growth is going to be that powerful cocktail of both a healthier economy along with fiscal stimulus.” Incredibly, some were worried it would stimulate the economy “too much.” Howard Gleckman, a senior fellow at the supposedly non-partisan Tax Policy Center, said “This one, there’s no question. Everyone agrees it will stimulate the economy. The question is will it stimulate the economy too much?”
Sadly for us all, this enthusiasm didn’t last long as long as the spin and lies supporting it. By August 2021, doubts had started to appear even as President Biden had begun taking victory laps for his supposedly winning economic formula. GDP growth for the second quarter was off some 30%. First quarter growth was revised downward. Job reports continued to miss expectations while inflation and supply chain issues started to become more apparent. At the time, Paul Ashworth, the chief economist at Capital Economics, said that the lower growth number offers “more evidence that stimulus provided surprisingly little bang for its buck, with the economy quickly pushing against unexpected supply constraints instead, which have driven inflation higher.” Suddenly, the experts were claiming economic growth would slow, and they immediately began looking for something to blame, anyone except the President himself. The Delta variant was an easy target back then, and so Mr. Ashworth described it this way, “The good news is that the economy has now surpassed its pre-pandemic level. But with the impact from the fiscal stimulus waning, surging prices weakening purchasing power, the delta variant running amok in the south and the saving rate lower than we thought, we expect GDP growth to slow to 3.5% annualized in the second half of this year.”
The second half of the year was, of course, defined not by a slight slowing of growth, but by much larger inflation and supply chain issues. The combination of the two was so severe that President Biden and his administration actually argued that Christmas didn’t need to be canceled, claiming you might not get the gift you want, but you can get some gift, as if that was some kind of achievement. Liz Reynolds, special assistant to the president for manufacturing and economic development, told the National Governors Association, “You won’t be able to get the jacket in 15 colors, but you will be able to get the jacket.” Press Secretary Jen Psaki described it as “the tragedy of the treadmill” delayed. Energy Secretary Jennifer Granholm flat out laughed at the idea the administration had any plan to combat rapidly rising gas and oil prices, but inflation proved immune to their flippant attitude, rising to the highest level since June of 1982 by December. CNBC described it as “The annual move was the fastest increase since June 1982 and comes amid a shortage of goods and workers and on the heels of unprecedented cash flowing through the U.S. economy from Congress and the Federal Reserve.”
The experts and the Biden Administration has previously argued that the spike was just “transitory” and nothing to worry about long term, but the reality of the worst number in almost 40 years required a new spin. Some claimed inflation was actually good news. Others promptly insisted it was actually the public’s problem because we failed to understand what transitory really meant. “We tend to use [transitory] to mean that it won’t leave a permanent mark in the form of higher inflation,” Federal Reserve Chairman Jerome Powell told a congressional hearing late last year. “I think it’s probably a good time to retire that word and try to explain more clearly what we mean.” In their mind, the problem, you see, is you and me, not that the experts had absolutely no idea what they were talking about, pay no attention to the many times they said something completely different. Instead, it was a problem we had understanding their genius. The simple word “transitory” means something different to the enlightened, even if that is something that’s never happened ever: Prices go up, they rarely come down except in certain evolving markets. The idea that we were going to have a huge spike in inflation, but then suddenly experience a drop in prices was always absurd, serving as nothing more than cover for their own failure.
Now, of course, they have moved on once more and are starting to say something even more different and troubling, believing you are too stupid to remember what they said just a few months ago. The conventional wisdom now is that a recession is looming. More than twice as many economists believe we will have one by the end of this year than did a year ago and the headlines are starting to blare about the danger. Vox.com claims “Overheating conditions indicate high probability of a US recession.” CNN reports that Bank of America is warning “Recession shock” is coming. Yahoo Finance quotes a slightly more optimistic strategist who believes it’s a “coin toss.” The Washington Post focuses on how recession risks are “rising” and the US isn’t “prepared.” The Wall Street Journal describes the same risk and NPR duly informs readers why “there are growing fears the U.S. is heading to a recession.” As they describe it, “Warning lights are flashing for the U.S. economy. A growing number of forecasters now believe a recession is on the horizon as the Federal Reserve gears up to raise interest rates sharply to combat the highest inflation in more than 40 years.”
Incredibly, they are still not willing to give up on the obvious political spin, claiming “It’s an unusual outlook at a time when the economy is strong by many measures. Employers have added nearly 6.5 million jobs in the last 12 months and unemployment has fallen to just 3.6%.” They are so deluded, or should I say committed to lying on behalf of the establishment, that they suggest the supposed greatness of the economy is to blame for the recession. Their tortured logic is as follows: It’s “that strong economy and, particularly, the sizzling labor market as employers try to hire more workers to meet surging consumer demand that has economists concerned. As employers scramble to find scarce workers, they’re bidding up wages, and that’s helping to push inflation even further above the Fed’s target of 2%.” Yes, once upon a time it was coronavirus causing economic problems, then it was the coronavirus induced supply chain crisis pushing up prices, then it was Putin’s “price hike,” but suddenly it’s you and me looking for work that is the true culprit. Once again, we are to blame. We should just stay home and receive government checks. Hidden beneath their attempts at misdirection, however, they do partially hit on the truth that the economy really isn’t growing the way it seems. Rather, it’s inflating. “The ultimate conclusion is that we are having very strong growth, but it is inflationary growth,” explains Mathew Luzetti, the chief US economist for Deutsche Bank, in something awfully close to reality.
Whatever they may try to claim, the underlying truth is simple, not requiring a “real card carrying expert” as Dr. Anthony Fauci might say: The economy was never performing as well as they insisted because this has always been an economic recovery unlike any other. Never before in the history of the United States or the modern world in general has the government intentionally shut down broad swaths of the economy, literally fining companies or even locking people up for simply wanting to do their jobs. Therefore, the growth we’ve been experiencing isn’t organic. It’s not real, as in something that would’ve happened without the self-induced pandemic lockdowns. Instead, it’s driven almost entirely by businesses that already existed reopening and rehiring. Not growing, but getting back to their baseline. It’s hard to find an apt analogy. Think of something like crimping a firehose to restrict the flow of water, and then letting it loose only to claim there’s suddenly a lot more water pressure than before. The total pressure was the same the entire time, you have no more or less, it was just artificially stopped. Or running out of gas in your car by refusing to fill up the tank, claiming there’s something wrong with the engine, and then bragging about the power you have once you fill it back up.
In the same vein, the economic growth we are seeing is an illusion, one that the media and the experts in the establishment were happy to let President Biden spin for his own ends. Further, none of them seems to understand (or want to admit) that many of the challenges we face are because the economy isn’t rebounding back to the same as before. There is no rewind button for anything so complex. You cannot simply fast forward to get to the same spot. Instead, the rebound, such as it is, varies widely across sectors, some of which are bigger than before, some close to the same, others that will never be the same. Home goods, home entertainment, large retailers, ecommerce, outdoor recreation, and other markets are doing well because consumer preferences have suddenly shifted in that direction. People are spending more on their homes and staying more at home. The sectors that depend on them leaving their house, however, from commercial real estate to restaurants and hospitality, are probably changed forever. They will continue to exist, of course, except in a different form. This is the root cause of the supply chain challenge. We’re set up to service some different economy that’s never coming back, but instead of recognizing that, we’re pursuing the worst possible course: Showering unnecessary government money in a desperate attempt to shore it up, demanding more money when that doesn’t work while increasing the costs of energy and transportation, and pretending like all of it will just go away one day if only we had more government cash. It’s like the economy was a jigsaw puzzle that we intentionally smashed apart, except when we went to put it back together, we realized the picture has changed forever and we don’t know what the new one is.
Sadly, I don’t think this reality will ever truly dawn on our so-called betters, or at least they will never admit it. The best they can do is offer platitudes, like Vice President Kamala Harris, describing it as only she can, “I acknowledge one must acknowledge that prices are going up, and that people are working hard and, in many cases, are worried about whether they can get through the end of the month and make it all work.” They are too invested in the establishment to recognize or be honest about what happened. The lockdowns are what they wrought. The dangers and the long-term impacts, they tried to wave away or deny anything was permanent, insisting instead that they could lead us to better days soon enough, while taking credit for inflation rather than growth. This post focuses on the economy, but much the same story is seen almost everywhere else, from the border to halfway around the world and the first land war in Europe in generations. Throughout it all, they continually spin great successes that aren’t, and wish away failures that are, pausing only to rewrite history before the ink is even dry. Meanwhile, President Biden continues to lead the United States and the world to unparalleled disaster on almost every front, and the march goes on right over a cliff, a fall that will crush the average citizen, but the establishment doesn’t care so long as they remain in charge.