President Joe Biden promised morning in America, lifting the nation’s spirit after a dreadful year of the coronavirus pandemic. Be it unity or a costly economic agenda, the new administration convinced millions of voters there would be happy days again in the United States. So far, the Build Back Better campaign is not building back the public’s optimism. As inflation intensifies and shortages worsen, Americans’ sentiment is declining to a level unseen since the aftermath of the Great Recession. Despite the grandiose promises coming out of the White House, the American people are no longer buying what U.S. officials are selling.
The University of Michigan Consumer Sentiment Index fell to 66.8 in November, the worst level since Nov. 2011. The reading fell short of the market estimate of 72.4 and down from 71.7 in October. The plunge in sentiment was also felt in consumers’ views of current economic conditions, tumbling to 73.2. American consumers might be turning sour on the post-pandemic recovery as they anticipate swelling inflation over the next one, three, and five years. The University of Michigan’s Inflation Expectations Index reached 4.9% in November, up from 4.8% in October.
The monthly survey also revealed 25% of consumers had lowered their living standards because of soaring price inflation. The study further discovered half of all U.S. families believe their real income will fall over the next year when adjusted for inflation. This makes sense, considering that higher average hourly earnings have not kept up with inflation. Wages advanced 4.9% year-over-year in October, but consumer price increases have topped 6% during the same period.
Richard Curtin, the survey’s chief economist, said in a statement:
“Consumer sentiment fell in early November to its lowest level in a decade due to an escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation.
Rising prices for homes, vehicles, and durables were reported more frequently than any other time in more than half a century.”
It is not only shoppers turning into bears on the U.S. economy. The National Federation of Independent Business’ (NFIB) Business Optimism Index slipped to 98.2 in October, down from 99.1 in September.
What’s Good About This Economy Anyway?
The consumer price index (CPI) has surged at the fastest pace in three decades. The producer price index (PPI) has climbed to the highest percentage in more than a decade. The personal consumption expenditure (PCE) price index, the Federal Reserve’s favorite inflation gauge, is also at a 30-year high.
But the two components that might be angering consumers the most are the food and energy sticker shocks. Beef and veal are up 20.1%, pork is up 14.1%, chicken is up 8.8%, coffee is up 4.7%, and fruits and vegetables are up 3%. The energy index spiked 30%, led by gasoline prices climbing 6.1% and natural gas increasing 6.6%. Even if these two volatile sectors are stripped from measurements, price inflation is still running above 4%.
At the same time, millions of workers must either be fed up with their career trajectories if they are quitting their jobs en masse. The Department of Labor confirmed that 4.43 million people quit, representing about 3% of the labor market. This comes as job openings surpassed most projections, totaling 10.438 million positions. At this point, it is safe to say that economists have zero clue what is happening in the post-COVID world.
Whatever the case, President Biden thinks it is the public’s fault for skyrocketing prices, explaining at a recent news conference that more consumers should be doing their shopping in the community rather than on Amazon. “They’re staying home and ordering online and buying product. Well with more people with money buying product and less product to buy, what happens? The supply chain is the reason and the answer is you guys, and I’ll get to that in a minute. What happens? Prices go up.”
At least he also conceded that his $2 trillion COVID-19 stimulus bill from earlier this year contributed to a surging CPI, telling reporters: “It changes people’s lives. But what happens if there’s nothing to buy and you got more money to compete for getting [goods]? It creates a real problem.”
A Collapsing Presidency
According to Real Clear Politics’ polling data average, the president is maintaining an approval rating of about 42%. Clearly, Americans are not endorsing Biden’s BBB pursuits as they are perturbed about having less money in their pockets. He has yet to complete his first year in the Oval Office, so he could turn the sinking ship around by spending trillions of dollars with money Washington does not have in its possession. Hello, red ink and printing press! Still, the likelihood of immense growth is as low as Vice President Kamala Harris’ approval rating. Not even the financial markets will sustain their monster rally, with the Federal Reserve trimming its asset-buying program and potentially raising interest rates ahead of schedule (June 2022, anyone?). The real-time experiment in Bidenomics is going up in flames. That’s no joke. Come on, man.
~ Read more from Andrew Moran.