With under 30 days to go before the mid term elections, President Joe Biden sat down with CNN’s Jake Tapper. To his credit, Tapper jumped right in on the issue most Americans are concerned about: “the economy remains top of mind for voters.”
Tapper mentioned JPMorgan Chase CEO Jamie Dimon, who recently predicted economic calamity within the next few months.
He also brought up a Bank of America forecast of 175,000 jobs a month being lost due to a possible recession.
Add to that two consecutive quarters of a shrinking economy.
Hold your horses, says Joe. No need to cause alarm!
Biden appeared a bit annoyed when Tapper asked, “Should the American people prepare for a recession?”
Biden answered, “Every six months they say this. Every six months, they look down the next six months and say what’s going to happen. It hadn’t happened yet. It hadn’t… I don’t think there will be a recession. If it is, it’ll be a very slight recession. That is, we’ll move down slightly.”
Economists may have a slight problem with Joe Biden’s broad definition of a recession. Back in 1974, economist Julius Shiskin came up with a definition of recession that is still, for the most part, used today. If there are two consecutive quarters of declining gross domestic product (GDP), that is a recession.
In other words, if the economy is still shrinking, even after counting government spending as “growth,” it’s a recession.
We’ve seen numerous examples of the media attempting to give cover to the Democrats by playing with the definitions, but the conditions for normal people tell the real story.
The Consumer Price Index, a flawed but still universal measurement of inflation, was at 8.3% month. That number was an increase of 4.9% from August of 2021.
Last month, the Federal Reserve also hiked interest rates up another 0.75 percentage points in response to the increased inflation rate. That means the cost of borrowing goes up – houses, vehicles, and yes – even the debt of the federal government.
Perhaps to the mega-rich and powerful, mortgage rates doubling isn’t a big deal. For everyone else? It’s a huge deal.
Biden added to his “we are not in a recession” mantra with this: “We are in a better position than any other major country in the world economically and politically.”
Even if that is true, so what? That doesn’t make a trip to the grocery store any cheaper.
He continued, “There has been so much accomplished that the automaticity of a recession is just not there.”
Biden then bragged about massive government spending bills like the American Rescue Plan and the Inflation Reduction Act, which many economic entities have declared will do little to nothing to curb inflation, as evidence that there won’t be a recession.
Are you lost? So was everyone else watching.
There are even more clues that a recession might already be in the works. Not only are Americans flinching when they head to the gas pump or grocery store, but the market for big ticket items like homes and cars is also not a good one.
At the end of September, the Associated Press reported that long term mortgage rates had risen for the sixth straight week. Mortgage lender Freddie Mac announced the rate for a 30-year fixed mortgage had risen from 6.29% to 6.70%. This time last year the rate was just 3%.
Car buyers are facing the same problems. The nation’s largest used car dealer CarMax announced an earnings drop of 54%, and overall sales dropping 6.4%. They also reported that the average price for a used vehicle was $28,657. Again, that is for a used car.
There are some out there who aren’t taking a beating in this economy. Most of us are, and colossal spending schemes do nothing at all to fix it.
Now is the time to support and share the sources you trust.
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