Of course, the money only ever existed in a government-published report. But the original “bullish” data was widely cited as a sign that all was well with the economy.
In truth, Americans are burning through their savings at a rapid pace. During the pandemic citizens reached record savings levels due to stimulus checks and programs, but since then all those excess savings have been burned through. Biden’s inflationary and anti-growth policies have taken their toll.
U.S. credit card debt recently surpassed $1.14 trillion, a new record, while growing at unprecedented speed. Compounding the problem, APRs on credit card debt are also at record highs, well over 20% on average, with certain cards reaching APRs of over 33%. That’s not far away from payday loan APRs.
And it’s not just American savings data that has been manipulated to appear healthier than it truly is.
New home sales data for the U.S. over the summer was also recently revised sharply downwards.
Payroll data and job openings have also been revised downward this fall. All sorts of bullish economic beats have been quietly revised to misses. It appears that the Biden administration broadly exaggerated economic statistics in an attempt to make the economy appear healthier than it truly was.
Strangely, these data corrections don’t get nearly as much attention as the original (incorrect) reporting did. Once the “good” headline number comes out, traders and algorithms react immediately to the news. But they largely ignore subsequent bearish revisions, which don’t get nearly as much coverage in the news.
It’s just the way the world works. When investors want to see positive economic data, they’ll find it. But eventually, the country will have to address these underlying issues head-on. Fortunately, we will soon have a competent leader in the White House to do so.
I still expect a recession to hit soon, if we’re not already in it, due to the Biden administration’s economic fumbles. It remains to be seen just how bad things might get in the short run.
In terms of Trump’s policy plan, the new tariffs will encourage foreign companies to manufacture in the U.S. It’s simple: if you want to sell to America, set up shop here and create jobs. Trump made some progress on this during his first term, but now that the GOP has control of Congress and a mandate from the American people, it should be a smoother process this time around. Tariffs can also be a powerful bargaining tool, as Trump has already shown with Canada and Mexico.
Importantly, Trump’s team understands that it is impossible to tax our way out of this situation. The only path forward is to grow the economy faster than the debt. Once we turn that corner, the problem begins to address itself.
I’m not saying it’s going to be all smooth sailing. True reform is always a challenging process. There will almost certainly be more inflation on the horizon (but not nearly as bad as if Kamala had won). This is an unavoidable consequence of decades of reckless government spending.
No comments:
Post a Comment