The White House wallowed in a bit of good news last week when the Labor Department revealed that inflation in June had cooled to its lowest pace — 3% — in more than two years. Still, Fed officials have signaled that another rate hike is coming because they don’t want to overreact to a single month’s improvement.
President Joe Biden took the news as a validation of his economic policies, which is like the arsonist offering a bow after the massive blaze he started has been 50% contained. Despite recent progress, inflation remains higher than the Fed target rate of 2% and more than double what it was when Biden entered the White House. Administration officials would prefer not to talk about how the rate ever climbed beyond 9% in the first place, the highest in four decades.
“Prices are going up at a slower rate overall, the good news is that things are not getting worse for American consumers,” Leo Feler, chief economist at the research firm Numerator, told The Wall Street Journal. “But that doesn’t mean they’re necessarily getting all that better.”
It’s also worth noting that wage hikes in June finally outpaced inflation for the first time in two years. Prior to that, rising prices had been gobbling up employee raises — and then some. While improved under Biden, the Journal reported, “inflation adjusted wage growth remains below the trend in the five years before the pandemic.”
The economy promises to be a signature issue in the upcoming campaign, which is why Biden has been desperately trying to spin “Bidenomics” as a wonderful success. In fact, it’s boilerplate progressive economic theory on steroids. Massive spending, a hyperactive regulatory state, bureaucratic central planning, a distrust of free markets and aggressive wealth transfers have been part of the Democratic approach to the economy dating back nearly a century.
Veronique de Rugy of George Mason’s Mercatus Center writes, “A Hoover Institution study of Bidenomics looked at the impact of taxes, regulations and spending. The authors found that ‘in the long run, Biden’s full agenda would reduce full-time equivalent employment per person by 3 percent, the capital stock per person by about 15 percent, real GDP per capita by more than 8 percent and real consumption per household by 7 percent.’ ”
Indeed, under the trajectory the Biden administration has set, the debt will continue to skyrocket as annual budget deficits reach $3 trillion early in the next decade. Even tax hikes won’t stop the tsunami of red ink, as the government swallows more and more private-sector production under the guise of equity. That’s Bidenomics.
