How the Biden-Harris Economy Left Most Americans Behind – WSJ

President Biden claims that he inherited the worst economy since the Great Depression, but this isn t close to true. The economy in January 2021 was fast recovering from the pandemic as vaccines rolled out and state lockdowns eased. GDP grew 34.8% in the third quarter of 2020, 4.2% in the fourth, and 5.2% in the first quarter of 2021. By the end of that first quarter, real GDP had returned to its pre-pandemic high. All Mr. Biden had to do was let the recovery unfold.

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Instead, Democrats in March 2021 used Covid relief as a pretext to pass $1.9 trillion in new spending. This was more than double Barack Obama s 2009 spending bonanza. State and local governments were the biggest beneficiaries, receiving $350 billion in direct aid, $122 billion for K-12 schools and $30 billion for mass transit. Insolvent union pension funds received a $86 billion rescue.

The rest was mostly transfer payments to individuals, including a five-month extension of enhanced unemployment benefits, a $3,600 fully refundable child tax credit, $1,400 stimulus payments per person, sweetened Affordable Care Act subsidies, an increased earned income tax credit including for folks who didn t work, housing subsidies and so much more.

The handouts discouraged the unemployed from returning to work and fueled consumer spending, which was already primed to surge owing to pent-up savings from the Covid lockdowns and spending under Donald Trump. By mid-2021, Americans had $2.3 trillion in excess savings relative to pre-pandemic levels equivalent to roughly 12.5% of disposable income.

So much money chasing too few goods fueled inflation, which was supercharged by the Federal Reserve s accommodative policy. Historically low mortgage rates drove up housing prices. The White House blamed corporate greed for inflation that peaked at 9.1% in June 2022, even as the spending party in Washington continued.

In November 2021, Congress passed a $1 trillion bill full of green pork and more money for states. Then came the $280 billion Chips Act and Mr. Biden s Green New Deal aka the Inflation Reduction Act which Goldman Sachs estimates will cost $1.2 trillion over a decade. Such heaps of government spending have distorted private investment.

via www.wsj.com

It was a print and spend Biden fandango is what it was. Now we might be well over the financial event horizon. I figure the only chance is to latch on to Nvidia and hope it catches the AI updraft, if there is an AI updraft. I think there will be, but I’m an optimist, at least about AI. But it might be the end of freedom as we’ve come to appreciate it, and that would be bad. But at least you’ll be comfortable.