Will 2021 go down as the year of blunders, boondoggles, and Biden’s economics? The American people were given a glimpse of what life under President Joe Biden America’s would look like, and the first year was dreadful. The administration’s economic program has been so disastrous that the president’s approval rating has plunged, and Democrats are worried about a clean Republican sweep in the 2022 mid-term elections. But before the country becomes entrenched in electoral politics, it would be appropriate to look back over the last 12 months and comb through the top economic and business stories.
Bidenflation Runs Wild
As the United States waves goodbye to 2021, a new CNBC All-America Economic survey revealed that inflation is officially Americans’ top concern, surpassing the pandemic for the first time since the early days of the COVID-19 public health crisis. Indeed, inflation has been the chief economic trend of the year, with the consumer price index (CPI) soaring to a 39-year high, the producer price index (PPI) hitting close to 10%, and the personal consumption expenditure (PCE) price index climbing to a multi-decade high. Everything costs more these days: eggs, beef, gasoline, electricity, men’s suits, and lamps.
The Supply Chain Crisis
At the California ports, ships carrying cargo are extending deep into the Pacific Ocean. There is a traffic jam of about 250 carriers at the Chinese ports amid new quarantine restrictions. From shipping container shortages to crates falling off boats and sinking, the global supply chain crisis has dominated business headlines and negatively impacted the holiday shopping season in many ways.
Despite the U.S. economy reopening and a record 11 million job openings, workers are not interested. Be it The Great Resignation or The Anti-Work Movement, there is a labor crisis in America today, and it is not abating anytime soon. The data also highlighted some notable developments forming in the labor market: millions of Americans quitting their jobs, the labor force participation rate at a 47-year low, and between four and six million fewer jobs than before the coronavirus pandemic. The headline numbers have been encouraging (for the most part), but the devil is in the details.
Debt Ceiling: The Theater of the Absurd
How many debt ceiling debates were there in 2021? Well, if you played a drinking game while watching the so-called adults within the corridors of power spar over the country’s skyrocketing debt levels, you would pass out from a drunken stupor. But, as the year comes to a close, it appears that the Republicans have conceded and given the Democrats what they want by agreeing to raise the debt limit. Once again, the GOP and the Democrats have sacrificed the prosperity of future generations out of political expediency.
Word of the Year: Transitory
Since the beginning of the Biden administration, both the Federal Reserve and the Treasury Department claimed that inflation would not rear its ugly head. However, after a couple of early-year higher-than-expected inflation reports, officials contended that inflation would be a little higher but only temporarily. By the middle of spring, it evolved into red-hot inflation being transitory. At the end of 2021, Fed Chair Jerome Powell and Treasury Secretary Janet Yellen retired the word and essentially conceded that they got it wrong, despite everyone outside of the nation’s capital understanding that inflation was here.
This Is Coal Country
Who could have imagined that coal would stage a comeback as much as it did in 2021? Indeed, Coal Country is back, and it had nothing to do with public policy support and relief mechanisms. Instead, two trends resuscitated coal: the disaster of green energy and good old-fashioned supply and demand. Coal prices are trading at all-time highs, inventories are essentially non-existent, coal mining has come back to life, and everyone across the globe, including green-focused Europe, is demanding the dirty rock.
Speaking of energy.
It’ll Be Oilright
As crude oil, natural gas, and gasoline prices spiked, it was a wild ride for energy markets. Although they eased in the home stretch of 2021 amid a lower demand outlook on Omicron variant fears, they are still soaring. JPMorgan Chase estimates that crude prices could hit $125 per barrel in 2022 as demand will be far greater than what the bears are anticipating. Oil’s performance over the next several months might depend on Omicron, the Organization of the Petroleum Exporting Countries (OPEC), the weather, and the administration’s assault on the oil and gas sector.
The Costs of Build Back Better
In September, President Biden tweeted: “My Build Back Better Agenda costs zero dollars.” Anyone who took an Econ 101 class in high school or college could understand the absurdity behind this comment. All the president’s men and women uttered this nonsense too. Even when the Congressional Budget Office (CBO) declared that the sweeping plan would add $200 billion to the federal deficit, Democrats went into damage control and insisted the non-partisan budget watchdog was wrong. White House Press Secretary Jen Psaki then accused the CBO of being wrong when it warned that if all the components of the social-spending and climate change bill were made permanent, approximately $3 trillion would be added to the deficit. It turns out that Bidenomics is not grounded in any economic thinking.
The Dollar King
Here is something that is shocking: The U.S. dollar was the top-performing advanced currency in 2021. The U.S. Dollar Index (DXY), which gauges the greenback against a basket of currencies, rallied more than 7% to trade in the 96.00-97.00 range. Although the buck’s international reserve currency status dissipated over the last 12 months, investors sought shelter in the conventional safe-haven asset throughout the turmoil and turbulence in the global economy and financial markets. Can the dollar maintain its king status in 2022?
Ain’t Life Evergrande?
Looking to the world’s second-largest economy, perhaps one of the biggest stories was the collapse of China Evergrande Group, the real estate develop behemoth that accumulated more than $300 billion in obligations. The company has missed bond payments, witnessed its stock crater, and wreaked havoc for investors nationwide. Its future is still up in the air, but many market analysts and creditors are not confident about its prospects in 2022. But will the Chinese leadership nationalize the group to avoid a contagion event?
Will 2022 Be a Repeat of 2020?
The way officials are acting, they think that this is 2020 all over again. And yet, despite possessing an efficacious vaccine and early reports indicating that Omicron is perhaps the best thing to happen in this pandemic, all three levels of government are going berserk and resorting to the same failed tactics of 2020: mask mandates, social distancing, and other public health restrictions. So, will 2022 be a brand-new year, or will it be a copy of 2022?
~ Read more from Andrew Moran.
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