Bad news has been hanging over the Biden admin’s head. More is on the way.
And Joe Biden’s having a mental breakdown over what this report says about him.
Inflation Barely Moves in June Amid Economic Concerns, Continues to Ravage American Finances
Inflation ticked down slightly year-over-year in June, though rising prices continue to impact average Americans’ finances, according to the latest release from the Bureau of Labor Statistics (BLS) on Wednesday.
The Consumer Price Index (CPI), a broad measure of everyday goods prices, increased by 3.0% annually in June, a slight decrease from 3.3% in May. On a month-over-month basis, CPI saw a minor decline of 0.1%. Meanwhile, Core CPI, which excludes the more volatile categories of energy and food, remained high with a 3.3% year-over-year increase in June, only marginally down from 3.4% in May.
Inflation had peaked at 9% under President Joe Biden in June 2022, a significant rise from 1.4% in January 2021. Despite the slight decrease, inflation has not fallen below 3% since then. MarketWatch economists had projected inflation to increase by 0.1% in June and to drop to 3.1% annually.
🚨 Just In: June US CPI annual inflation rises 3.0%, below expectations for 3.1%.
Core CPI inflation increased 3.3% Y/Y, compared to forecasts for a gain of 3.4%.
Looks like a September rate cut is coming. pic.twitter.com/q5WGZlgmaK
— Jesse Cohen (@JesseCohenInv) July 11, 2024
In an effort to combat high inflation, the Federal Reserve has raised its federal funds rate to a 23-year high range of 5.25% to 5.50%. Most investors, as of Thursday morning, do not expect the Fed to cut rates until the Federal Open Market Committee’s September meeting due to persistent inflation, which has significantly increased the cost of credit for both consumers and businesses, according to the CME Group’s FedWatch Tool.
The unemployment rate also saw a slight increase to 4.1% in June, with the U.S. economy adding 206,000 non-farm payroll jobs. The largest share of job growth came from a 70,000 gain in government employment. Fed Chair Jerome Powell, in his testimony to Congress on Tuesday, noted signs of a cooling job market, raising hopes for a possible rate cut as the economy slows, ABC News reported.
Real gross domestic product (GDP) grew at an annual rate of just 1.4% in the first quarter of 2024, a sharp decline from the 3.4% growth in the fourth quarter of 2023, according to the Bureau of Economic Analysis. This slowdown, coupled with persistent inflation, has raised concerns about a potential period of stagflation, reminiscent of the economic challenges faced by Americans in the 1970s and early 1980s.
Little Progress Made Despite Major Federal Government Intervention
The Biden administration’s monetary and macroeconomic policies have largely been characterized by big government involvement to try and get the economy to stabilize and hopefully get back on track sooner rather than later. Moves like outright money stimulants, federal reserve rate hikes, and more, are all designed to literally force the economy into a state of stalling and force rising prices to come down.
The only issue is that it hasn’t really been working quite the way the Biden administration wants it to. Sure, if you quite literally take an axe to the legs of the economy to force it to cool down, it will. But there are consequences to doing so, as Joe Biden is finding out.
In their attempts to get inflation back down to earth and not as high as a hippie at a Jimi Hendrix show, they’ve created new economic disasters that have their own serious impacts on the economy as well.
The federal reserve’s rate hikes have created a housing crisis now that Americans have a much harder time trying to secure a home for their families that’s affordable. This has put a serious burden on the renter’s market, with the renting housing availability unable to keep up with the increased demand.
Furthermore, major corporations with the capital to bite the bullet on a 7% mortgage rate are happy to continue to buy up housing to either rent them at high prices or flip them with utterly massive profit margins. Everyday Americans are unable to compete with these corporations who are coming up with cash offers and an ability to close within a matter of hours instead of weeks.
While the rate hikes have been bad enough, the Biden administration has been working against themselves by printing and spending money that the economy can’t exactly afford right now. If you increase monetary supply, arbitrarily, then it’s natural to see all ships rise. That’s what inflation is. All prices necessarily increase when you flood a market with purchasing power.
Milton Friedman, a leading figure in the Chicago School of Economics, stated, “Inflation is always and everywhere a monetary phenomenon.” He believed that inflation results from an increase in the money supply controlled by the government and central banks, rather than from natural economic forces.
Friedman and his collaborator, Anna Schwartz, conducted extensive empirical research and found historical evidence supporting the idea that significant increases in the money supply were often followed by periods of inflation. Their work, particularly in A Monetary History of the United States, 1867–1960, demonstrated this pattern across different time periods and economic contexts.
In the short term, increases in the money supply can stimulate economic activity and reduce unemployment. However, Friedman argued that in the long run, these effects wear off, and the primary result is higher prices. This idea is encapsulated in the concept of the natural rate of unemployment, which suggests that there is a level of unemployment that cannot be reduced by monetary policy without causing inflation.
The Conservative Column will keep you updated on any major economic news.
