Bidenomics Relegates Us to 2015 Incomes
– By Howard Sierer –
Pres. Biden and his advisers can’t figure out why Americans are so negative about him and his economic policies. After all, news headlines tell us that inflation is coming down, so that problem is behind us, right?
Returning to lower inflation rates does not solve the problems caused by Biden’s inflation any more than extinguishing a house fire immediately returns that home to its original condition. In either case, the victims are faced with an extended and costly effort to repair the damage.
Thanks to Biden and Democrats in Congress, the U.S. Department of Labor reports that the Consumer Price Index (CPI) through November of this last year is up 17.4% from the day Biden took office. Over that same interval, the U.S. Bureau of Labor Statistics reports that average hourly earnings increased only 14%. As a result, the BLS reports that average inflation-adjusted wages and salaries have dropped 3.2% during the Biden presidency.
If you’re feeling poorer than you have in years, it’s more than just a feeling. The BLS data shows that the average American’s inflation-adjusted wages are equal to what they were in 2015. For many Americans, the costs of necessities chews up a greater percentage of their budgets than they did when Biden took office putting aspirations like buying a car or purchasing a home out of reach.
Not only are car and house prices higher, interest rates on loans needed to finance them are dramatically higher. Those interest rates have been jacked up by the Federal Reserve in the last two years to combat Biden’s three-year, 17.4% CPI inflation. While home mortgage rates are now about 7% after peaking at 8% last fall, compare them to rates available in the recent past.
In the fall of 2021, my daughter complained when she had to settle for 2.99% mortgage rate, just missing the 2.625% rate that my son got when he re-financed his mortgage a month earlier. For both of them and literally millions of others around the country, those mortgage loans are now essentially “free money” with today’s inflation rate still higher than their mortgage costs.
Many homeowners with these low-rate mortgages are staying put, reducing the inventory of homes for sale. Of those for sale, only 16% were “affordable” according to housing tracking firm Redfin: low inventory allows sellers to command higher prices. This badly distorted housing market is another legacy of Democrats’ massive spending over the last three years.
With little regard for the future consequences of their spending, Democrats committed the country to a $1.9 trillion so-called American Rescue Plan in March 2021 even though the country’s GDP had been growing robustly since April 2020 and already had passed its old high by that March. Then in 2022, they poured more fuel on the inflation fire with the $1 trillion Infrastructure Investment and Jobs Act and another $300 billion on the hilariously-misnamed Inflation Reduction Act.
The Federal Reserve blundered when it chose to purchase over $1.3 trillion of low-rate mortgages in 2020-21, ostensibly to stabilize the banking system. The Fed created this money out of thin air and fed it (pun intended) into the economy. When added to the gusher of cash cascading from Democrats’ spending blowout, crippling inflation was inevitable as I wrote at the time.
Biden and his Democratic enablers in Congress will blame inflation on everyone from the Chinese to Vladimir Putin to greedy corporations, but the 2015-level incomes to which most Americans are relegated are a direct result of irresponsible Bidenomics.
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