When American consumers received their stimulus checks from the U.S. government, it was time to hit the shopping mall, click on Amazon, or pay the bills. This triggered an injection into the world's largest economy, raising personal spending by 5% in March and 0.9% in April. But it appears that the cash infusion from Uncle Sam's pocket has been exhausted.
The Biden Stimmy Exhausted
According to the Bureau of Economic Analysis (BEA), personal spending in the U.S. marketplace was unchanged at 0%, falling short of economists' projection of a 0.4% boost. While spending on services was strong, consumer dollars on goods slumped. Perhaps Americans are also refraining from swiping, tapping, and inserting amid higher prices throughout the economy.
The Federal Reserve's favorite inflation measurement, the personal consumption expenditures (PCE) price index, surged at an annualized rate of 3.9% in May. This was the highest gauge since the 1990s. Based on the University of Michigan's inflation expectations index, it looks like the cost of living could be higher in June.
Is life in President Joe Biden's America going to get way too expensive in the post-pandemic economy?
BofA to America: Bring the Wheelbarrows
Analysts at the Bank of America recently turned heads when they warned that the U.S. economy would be in store for a brief period of hyperinflation. The financial institution has adjusted its forecast, and now Savita Subramanian, the chief equity strategist, is warning about price inflation running hotter for longer than initially anticipated.
Since the beginning of May, mentions of "higher inflation" on earnings calls spiked by a record 800% year-over-year, with the most significant risks concentrating in consumer goods, industrials, and materials. "On an absolute basis, [inflation] mentions skyrocketed to near-record highs from 2011, pointing to at the very least, 'transitory' hyper-inflation ahead," Subramanian wrote.
BofA chief investment strategist Michael Hartnett also explained that U.S. price increases could continue for up to four years, forecasting that assets, commodities, and housing will dominate inflation talk for the next few years. He added that "only a market crash will prevent global central banks tightening next six months."
But while supply chain disruptions and simultaneous global demand are essential factors, consider this finding from the Wall Street titan: Central banks have purchased $900 million in financial assets every hour in the past 15 months. Did anyone expect anything different when these organizations are printing money like never before?
The Century of the Middle Class?
Has this been the century of the global middle class? It has been repeatedly stated that the middle class is going extinct, leading to an economy with only two classes: the poor and the rich. But is this the stuff of dystopian science-fiction novels and leftist groupthink?
According to a new study by Credit Suisse, the global middle class has increased substantially over the last 20 years.
While media outlets are focusing on the report's finding that the number of millionaires has exploded, many reporters are missing out on this crucial statistic: the global middle class, with assets ranging between $10,000 and $100,000, tripled from 507 million in 2000 to 1.7 billion by the middle of 2020. The number of upper-middle-class – adults with assets worth between $100,000 and $1 million – has also more than doubled from 208 million to 583 million during the same timeframe.
The 2021 global wealth report emphasized increasing prosperity in developing countries, thanks to more nations embracing the free-enterprise system and the economy becoming more globalized. The annual research investigation also discovered that international wealth topped $18 trillion, the number of millionaires worldwide was more than 56 million, and the average wealth per adult was just below $80,000 at the end of 2020. Despite the coronavirus pandemic decimating economies throughout the planet, study authors noted that "countries facing the biggest economic challenges have achieved higher-than-average wealth gains."
As Liberty Nation has reported over the years, the U.S. middle class continues to thrive, even as it comes under assault through the weapon of taxation. In fact, occupants are moving up into higher income categories – or, at least they did before the COVID-19 public health crisis. Either way, the market-based system has facilitated enormous wealth generation. If it were not for the government's disastrous fiscal policies of the last 15 months, perhaps the world would have been a little richer than it is today.
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Read more from Andrew Moran.
