Recent polling data from CNN reveals a grim reality: 84 percent of Americans are concerned about the national economy. Despite President Biden’s efforts to highlight seemingly positive metrics as indicators of the success of his progressive policies, a closer look at the data reveals why most Americans remain dissatisfied.
Biden’s claim of adding 14 million jobs since taking office would be impressive if it were true.
The reality is that, since he took office in Jan. 2021, 13 million private sector jobs have been added. This appropriately excludes the unproductive addition of one million government jobs that will soon set a record under his watch.
But the bigger point negating his rosy scenario is that the vast majority of this touted “job growth” stems from restoring job losses from the pandemic lockdowns.
When we accurately tally the new jobs added since the shutdowns began in Feb. 2020, the count stands at 4.5 million private sector jobs added in three years. While this is a positive, it’s an average of 1.5 million jobs yearly, far from qualifying as record-breaking job creation.
The latest U.S. jobs report for November provides additional data, reaffirming the mixed nature of the labor market.
The payroll report indicates a feeble performance. There was a headline number of 199,000 jobs added. But there were revisions in October of 35,000 fewer jobs added. So, net additions stand at 164,000 jobs. When government jobs are correctly subtracted, the count is just 115,000 new productive private jobs last month.
On a more positive note, the household report shows a substantial increase of 532,000 in the labor force, resulting in a 62.8 percent participation rate. Employment experienced robust growth of 747,000, contributing to a decline in the unemployment rate to 3.7 percent. But the broader unemployment rate that includes underemployed and discouraged workers is nearly twice as high at seven percent.
However, it’s crucial to note that the average weekly earnings show a 3.7 percent increase over the last year, though this has been overshadowed by the elevated inflation.
Fresh data on inflation as measured by the chained consumer price index (chained-CPI), which accounts for the substitution effect of changes in individual prices not accounted for by the headline CPI, reveals signs of moderation.
The latest core chained-CPI inflation rate, which excludes food and energy and is watched by the Federal Reserves, for Nov. 2023 was up 3.7 percent year-over-year. Not only is this 85 percent higher than the Fed’s average inflation rate target of two percent, it also nearly matches the increase in earnings, negating any increase in purchasing power.
In fact, real average weekly earnings have declined for 24 straight months. No wonder people are concerned about the economy.
The ongoing reduction of the Fed’s balance sheet contributes to this inflation moderation, but further cuts to its bloated balance sheet are necessary to stabilize prices across the economy. Their balance sheet currently hovers around $8 trillion, nearly double its pre-pandemic figure, having increased tenfold in fifteen years from $800 billion in 2007.
While some blame the national debt crisis on not having enough tax revenue from slower-than-optimal GDP growth, the truth is excessive government spending.
Inflation is not your fault, as The Atlantic recently claimed.
It’s the fault of excessive government spending by Congress that led to rising national debt which the Fed purchased and printed money. Too much money chasing too few goods is the classic definition of inflation, and it fits this time, too.
A better way to solve this would be to slash government spending and taxes like President Calvin Coolidge did a century ago. During the Roaring 20s, the national debt declined, and the economy supported more opportunities for people to flourish.
In light of the evidence, the question arises: Is Bidenomics working? The answer, drawn from the data, suggests it is not.
To guide the economy back on course, recalibration is imperative. This includes prioritizing fiscal responsibility, pruning the Fed’s ballooning balance sheet, and reining in excessive government spending.
Only through such pro-growth measures can we hope to unlock genuine economic recovery and chart a course toward lasting prosperity.
Vance Ginn, Ph.D.