U.S. gross domestic product shrank 1.4% in the first quarter at the same time inflation continued to soar. For older Americans, that combination conjures memories of 1970s stagflation, a nightmarish combination of double-digit inflation, double-digit interest rates, soaring gasoline prices and persistently high unemployment. The entire economic mess got dumped on President Jimmy Carter’s lap after the 1976 election, even though it was neither his fault nor the fault of his predecessors, Gerald Ford and Richard Nixon.
Sometimes, global economic forces converge just like weather systems to create a perfect storm, and woe to the president who gets caught in it. The timing of the current storm couldn’t be worse for President Joe Biden as he tries to minimize the damage Democrats are bracing for in this year’s midterm elections. Republicans can be expected to rub Biden’s nose in bad economic data, but voters would be wise to study up on the facts rather than rely on political spin.
Biden inherited an economy still in pandemic shutdown mode. Manufacturers abroad, like here, had sent workers home and curtailed production to halt the spread of the coronavirus. Consumer spending plummeted. Manufacturers sold off inventories to meet whatever demand there was. Fuel prices had plummeted because motorists also were staying home.
