It’s a message most Americans are slowly figuring out for themselves: don’t look at your 401(k) for a while. After a dismal August inflation report was released on Tuesday, the stock market took its sharpest nosedive since June of 2020, with the Dow plunging nearly 1,300 points.
Only five S&P stocks finished in the green, and the plunge erased nearly all gains stocks made during the last four positive sessions.
While the “experts” were predicting lower inflation numbers, they were obviously wrong – and the market reflected that poor assumption.
You never would have known it to look at the White House yesterday, where Democrats were celebrating their “Inflation Reduction Act.”
The Stock Market is lower today than it was when Biden took office.
And worse than that, inflation is crippling our economy and American families.
What a disaster!
— Rep. Jody Hice (@CongressmanHice) September 14, 2022
August Inflation Report
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The August inflation report was not what economists were expecting. Month over month headline inflation rose 0.1%, month over month core inflation rose 0.6%, and the August 2022 inflation rate up to a sobering 8.3% over last year.
Dow Jones surveyed economists who predicted a decline of 0.1% for overall inflation, and core inflation increasing to 0.3%. The latest inflation report will be the last one before the September 20-21 meeting of the Fed, where another rate hike is expected.
Rubeela Farooqi, the chief economist at High Frequency Economics, told NPR, “Coupled with a labor market that is still strong, the data seal the deal for another aggressive, 75-basis point rate hike next week.”
While the press has described the Fed’s actions as aggressive, interest rates are nowhere near what they were in the early 80’s, when Fed Chairman Paul Volcker crushed inflation with 20% interest rates.
What inflation is doing to the bigger picture isn’t good – already as of June, retirement accounts had lost trillions in value. Yesterday’s action was not at all helpful on that front.
Tens of millions of Americans rely on their 401(k) as their main retirement account.
Joe Biden thinks recession, inflation, and a crashing stock market are a winning formula for America. 🤡
— 99.97% Right (@StopComplying07) September 13, 2022
White House Victory Lap
By every indication, inflation is not getting any better, and it will, in turn, continue to send false signals out in the economy.
But yesterday’s tankjob didn’t stop President Joe Biden and Democrats from holding a victory lap celebration at the White House for their misnamed Inflation Reduction Act.
Complete with an appearance by singer James Taylor, Democrats did a happy dance over the behemoth piece of legislation that many economists say will do nothing of the sort.
But that didn’t stop House Speaker Nancy Pelosi from commenting that the Act will be “driving down costs for kitchen table items for America’s working families.” Pelosi didn’t stop there. She thanked Joe Biden for his “leadership.”
“Mr. President, thank you for unifying and inspiring a vision of a stronger, fairer, safer future for all our children. Your extraordinary leadership has made this glorious day possible.”
Many readers will no doubt recall President Biden’s previous victory lap on the stock market, proclaiming, “The stock market is surging. It’s gone up higher under me than anybody.”
Don’t count your chickens, Joe.
The message to the American people from their elected officials: don’t believe your lying eyes.
The stock market is presently down a thousand points after inflation hit 8.3%, much worse than expected. And Joe Biden is having a celebration at the White House to praise his administration’s response to inflation. You can’t even make this up. It’s tone deaf insanity.
— Clay Travis (@ClayTravis) September 13, 2022
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