While it's perfectly true that the third quarter economy, at least in terms of GDP, was stronger than expected and inflation rates have come down (undeniably true), President Biden and his staff are mystified at their continued basement-level economic polls.
Recent polls show Biden's economy is rating at just 21% with 78% saying it's in bad shape. President Biden is blaming the media (ha, ha, ha), but he should blame his own policies.
Right at the start of his term, he front-loaded massive federal spending, regulations and his socialist Green New Deal war against fossil fuels. The result? Skyrocketing inflation. Now, after two years of root canal interest rate hike tightening by the Federal Reserve, inflation has eased, but the legacy of these Bidenomics mistakes lives on. It's about plunging affordability.
Here's an example: according to the U.S. Bureau of Labor Statistics, real average weekly earnings back in January 2021 were $399. We're talking about middle-class working folks here.
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Now, in November 2023, that same measure of real average weekly earnings stood at $380 -- $19 or 4.7% less than three years ago. As if that weren't bad enough, demoralizing the economy, the level of consumer prices has gone up 17%. So, our middle-class family has lost over 20% of purchasing power under Joe Bidenomics.
They don't buy and sell GDP, nor do they live on year-to-year inflation rates. It's the falling level of wages and the rising level of prices that have caused high anxiety over Joe Biden's economic policies. That's the key point. Affordability has dropped significantly over the past three years.
During the Trump years, by the by, of tax cutting, deregulating, and "drill baby drill," middle-class family incomes went up at least (pre-pandemic) by $6,000, but measured the same way, middle-class incomes fell roughly $4,000 under Bidenomics.
There are lots of other issues out there in the economy. Despite some recent good news, in the two years post-pandemic, the Biden economy has only averaged 1.7% growth. That’s all. The consumer price index has definitely slowed year on year to just over 3% -- and that's good news – but the fact remains in the last two post-pandemic years the CPI has averaged 6% at an annual rate.
Consumers continue to lean on credit cards and shave off their savings in order to spend post-COVID, but that game may come to an end sooner than you think. The Conference Board’s Index of Leading Economic Indicators has fallen 20 straight months.
The Treasury interest rate curve is way upside-down with short rates far above longer rates. Manufacturing has been negative for a year, as has business investment. Perhaps more importantly, manufacturing jobs have virtually dried up, even though government jobs have been leading the employment parade for many months, but principally, it's the plunging affordability crisis that has plagued Bidenomics from Day One.
Unless and until he changes that -- a feat that will be mighty hard under his current ultra-liberal, big government, collectivist policies -- working folks are going to bury him in the polls come November.
This article is adapted from Larry Kudlow’s opening commentary on the January 2, 2024, edition of "Kudlow."
