Yes, yes, everyone who is paying attention knows by now that things are bad - or perhaps worse than bad. The persistent inflation, also colloquially known as Bidenflation, has made the country collectively frown. Well, perhaps not everyone feels that way. If you occupy a slot in the top 1%, you are sitting pretty, thanks to rocketing house prices and soaring stock market valuations, buoyed by the Federal Reserve's monetary easing endeavors. However, if you are a middle-class individual or a small business, good luck -- because inflation is eating your lunch.
Bidenflation Comes for Small Businesses
A new survey by small business network Alignable showed that 86% of US entrepreneurs report facing the pain of rising prices. The study, conducted with more than 3,000 business owners from April to May, showed that inflation is the top issue hurting small businesses. This was followed by tax policies (79%) and regulations (76%). Just 6% report having no worries or issues.
Alignable's findings come soon after the National Federation of Independent Business (NFIB) published the results of its latest Small Business Optimism Index. The long-running monthly poll highlighted that the index inched higher by 1.2 basis points, but it was the 28th consecutive month below the 50-year average. What is the cause of small business pessimism? Inflation.
“Cost pressures remain the top issue for small business owners, including historically high levels of owners raising compensation to keep and attract employees,” said Bill Dunkelberg, NFIB chief economist, in the report. “Overall, small business owners remain historically very pessimistic as they continue to navigate these challenges. Owners are dealing with a rising level of uncertainty but will continue to do what they do best – serve their customers.”
The RedBalloon-PublicSquare May Freedom Economy Index survey of 80,000 small businesses depicted owners in "survival mode." The monthly study revealed some fascinating facts:
70% are neither hiring nor firing staff.
60% are preparing for stagflation (a blend of stagnating growth and high inflation).
49% say their companies "definitely" or "probably" will not survive another four years of President Joe Biden.
40% are delaying paying bills to manage cash flow.
"Just like families all across the nation, many small business owners are now in bill paying triage,” said Andrew Crapuchettes, RedBalloon CEO, in a statement. “All of the government reports and happy-talk from Washington DC doesn’t change that Americans continue wrestling with inflation, and a majority of small business owners now predict we’ll slip into stagflation."
Despite the administration's accusations of "greedflation," the private sector is enduring broad-pressured input price pressures. Last month, the producer price index (PPI), a gauge of costs businesses pay for goods and services, rose at a higher-than-expected 0.5%. Even core wholesale prices, which exclude the volatile energy and food categories, surged 0.5%. The PPI has climbed 26% since January 2021. By comparison, the consumer price index (CPI) has advanced 20% in the same span. If it were the supply chain snafus and corporate greed that resulted in 40-year-high inflation, then wouldn’t consumer prices collapse by now?
Consumers Down in the Dumps
It is not only businesses that feel depressed by Bidenflation. Consumers are also down in the dumps.
The University of Michigan's Consumer Sentiment Index was revised higher in May, but it still hovered around its lowest level in six months. Why? The usual suspects: inflation, labor market concerns, and frustration over high interest rates. The Conference Board's Consumer Confidence Index retreated in April as consumers were more pessimistic about jobs, income, and future business conditions. Gallup found that most Americans are less optimistic about the economy.
Media Outraged Over How Americans Feel
Media outlets were apoplectic over the results of a new Guardian-Harris poll, which showed more than half (56%) of respondents think the United States is in a recession. Fifty-eight percent noted that Biden is responsible for what they perceive as an economic downturn. Here are some of the headlines reporting on the survey:
NBC News: "Most Americans falsely think the U.S. is in a recession, poll shows."
The Guardian: "Majority of Americans wrongly believe US is in recession."
The Hill: "Nearly 3 in 5 incorrectly believe US is in economic recession."
Indeed, the US economy is not in a recession, defined as two consecutive quarters of negative GDP growth. That said, it is hard to blame the public when activist reporters constantly redefine the term depending on who occupies the Oval Office. Does anyone remember the first half of 2022? The United States entered a technical recession after contracting 2% in the first quarter of 2022 and 0.6% in the second quarter. However, the establishment press did its best to convince the public that two straight quarters of negative growth was not a recession.
"While two consecutive quarters of negative growth is often considered a recession, it's not an official definition," reported NPR in July 2022. "Many private economists agree that the United States is not in recession -- yet," said Reuters. "Even with the economy recording a second straight quarter of negative GDP, many economists do not regard it as constituting a recession," the Associated Press told readers. "The American economy didn’t get the memo that it’s supposed to already be in a recession," CNN quipped.
It was understandable why the media went into defensive mode at the time. The White House published a July 2022 paper that essentially asserted Econ 101 was wrong and that two consecutive quarters of falling real GDP was not a recession. Of course, the news outlets sprinted to the opposite end of the recession field and redefined it under former President Donald Trump. Former CNN personality John Harwood, for example, argued that a recession was a single quarter of enormous contraction.
Yes, But Why?
The current administration gripes that Americans are sour on the economy because of how the media are reporting the data. This is misleading. Publications and broadcast networks routinely complement reporting on weaker consumer sentiment with a nod to an expanding gross domestic product. How could the average household be so gloomy about the economy if non-residential fixed investment numbers rose 0.9% in the last quarter? It is the conceit of the anointed, a trait picked up by those living inside New York City or Washington, DC, bubbles where hardly anyone escapes to sniff fresh air, touch the grass, and realize how millions are struggling.
Is Bidenflation the chief culprit behind rampant inflation? Economists will debate this question for eternity. However, for a chief executive overseeing a turbulent climate, the president often deceives, deflects, and denies – claiming, for example, that inflation was 9% in January 2021. This could partially explain why voters overwhelmingly disapprove of the incumbent’s handling of the economy.
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