The American consumer is facing a “perfect storm” as the three pillars propping up spending power crumble simultaneously. The pandemic savings that once provided a cushion have been depleted, wage growth has plummeted by 80%, and delinquency rates have surged by 50%. This triad of deteriorating factors signals a bleak horizon for consumer resilience and economic stability.
Since January 2021, inflation has relentlessly climbed, with consumer and wholesale prices rising around 19%, and core prices for consumers and businesses up about 18%. Recently, cumulative Consumer Price Index (CPI) increases have finally aligned with Producer Price Index (PPI) increases, intensifying the economic strain on households and businesses alike.
The reality of “Bidenomics” is stark: government spending not only places taxpayers between the rock of taxation and the hard place of inflation but also undermines long-term fiscal health. Despite optimistic projections, the Fed’s 2% inflation target seems increasingly out of reach. Without significant reductions in government spending and a renewed focus on America’s fiscal health, these economic pressures will continue to mount.
The dire situation necessitates creative statistical adjustments to mask the severity of the decline, but no amount of number-crunching can alter the fundamental truth: the current trajectory is unsustainable. The persistent mismatch between government spending and economic reality underscores the urgent need for policymakers to prioritize fiscal responsibility and structural reforms to safeguard the future.
Sources:
“Perfect storm” as all 3 drivers of consumers lose steam all at once.
Since last year, the American consumer has been propped up by pandemic savings, wages catching up to inflation, and soaring debt.
All 3 are tapped out:
– The savings are gone.
– Wage growth is down 80%.
-… pic.twitter.com/6Z0HovTQCL— Peter St Onge, Ph.D. (@profstonge) June 13, 2024
Since Jan '21, overall consumer and wholesale prices are up about 19% while prices for consumers and businesses excluding food and energy are up an average of around 18% – it has only been in recent months that cumulative CPI increases have finally caught up to PPI increases: pic.twitter.com/VURNFeSzE2
— E.J. Antoni, Ph.D. (@RealEJAntoni) June 13, 2024
Our economists keep getting it right.
You can kiss the Fed’s 2% inflation target goodbye. We were never trending that way, and we won’t be unless Congress decides to start caring about America’s fiscal health and cut government spending.@RichAStern pic.twitter.com/eiCk8OxadM
— Heritage Foundation (@Heritage) June 12, 2024
6 inflation metrics for your consideration – all of them have been trending towards ~3% or higher this year: pic.twitter.com/BUauW50IWe
— E.J. Antoni, Ph.D. (@RealEJAntoni) June 13, 2024