Customers wait in line to enter a Prada retailer within the SoHo neighborhood of New York, Aug. 25, 2021.
The economic system that might have been if it hadn’t been for this A year ago, when the Biden Administration came into power, they focused on the pandemic. Now, think about what would have happened if they had done that. Make sure the vaccines are out, speed up the COVID therapies, and let an economy that is ready to soar take off on its own. In March, there was no $1.9 trillion “aid” bill, and there was no threat of recent tax increases or spending to “rework” American society. People and businesses should have more confidence in the economy now than they do. There would be less inflation, fewer shortages, and less of a price rise. We’ll never know for sure, but there’s a good reason to think so as we look at Thursday’s report from the Bureau of Economic Analysis that GDP grew 5.7% in 2021. When it comes to each year’s growth, this is the fastest since the Eighties. The pandemic’s recovery was always going to take off. Politicians shut down the economy for a lot of 2020 and then gave money to people’s pockets to make up for it. The Federal Reserve also gave more money to the economy. If things went well for the Biden Administration in 2021, it’s not likely that they’d be the ones to be blamed for the rise. In this case, the economy didn’t grow as quickly or in a healthy way as it should have in 2021. That can be seen in the small print of how things changed in the fourth quarter. The top line grew 6.9% in the fourth quarter, up from 2.3% in the third quarter, which was hurt by a surge in the Delta Covid variant. GDP also had a big part, but by far the most important thing that made it up was a rise in inventories (4.9 percent). This means that stores and other businesses were filling empty shelves, not making sales. There’s likely to be more stock buildup because of shortages in the economy, but the fourth-quarter increase isn’t going to last. Shopper spending made up 2.25 percent of the total, but a lot of that came from spending down savings from all that government money. In the third quarter, the rate of private saving fell from 9.5% to 7.4%, which is less than half. Actual disposable income, after inflation, fell 5.8% in the fourth quarter, after falling 4.3% in the third. As the year 2022 starts, the sugar high that people got from government funds is going down. The White House praised the GDP growth figure, but when things are going so well, why do polls give the economy and Vise President Biden bad marks? The best answer is inflation, which is running at 7% in the consumer price index. Even the Fed’s favorite inflation measure, personal-consumption expenditures, rose at an annual rate of 6.5% in the fourth quarter, up from 5.3% in the third. People’s real wages after inflation are going down for many people, even tho companies are paying a lot more to keep employees who are hard to find. When the COVID method was used, it would have helped. The March spending spree led to a surge in demand that was met by a long-term lack of supplies. People are more afraid because of the proposed Build Back Higher tax, which promises to punish businesses with new regulations. All of those mistakes in coverage were to blame for President Biden’s desire to please the Democratic left, which was to blame for all of those mistakes in coverage. It’s not too late to learn, and the best thing for Mr. Biden to do now would be to do nothing. Take away the BBB, kill the plans for new laws that could raise prices and costs, and stop being anti-home energy and anti-exports. Let the Fed deal with inflation. When the political class doesn’t get in the way, the U.S. economy has a lot of power to get back on its feet. In Potomac Watch, Joe Biden says that Justice Stephen Breyer’s new standards should be changed because “the first black woman ever nominated to the United States Supreme Court.” Pictures: Pool, AP, and Reuters. A composite of Mark Kelly.
