02.07.23

American Families’ Finances Are Approaching The Breaking Point Under The Cumulative Weight Of Months Of Painful Inflation In Biden’s Economy

Most Americans Continue To Disapprove Of President Biden’s Handling Of The Economy And Over 40% Say They Are Worse Off Today Than When Biden Took Office

“[A] growing number of Americans say their own financial circumstances are worsening on Biden’s watch. Roughly 4 in 10 Americans (41 percent) say they are not as well-off financially since Biden became president, up from 35 percent one year ago and the highest percentage to report such a sentiment under any president in Post-ABC polls since measurement began in 1986.” (“Americans Not Feeling Impact Of Biden Agenda, Post-ABC Poll Finds,” The Washington Post, 2/06/2023)

 

Since President Biden Took Office, Prices For Food, Energy, Transportation, And Housing Have Increased At Staggering Rates

Since President Biden took office, inflation has increased 13.5%. (Bureau of Labor Statistics, Accessed 1/12/2023)

Americans Continue Losing More Of Their Paychecks To Inflation, With Year-On-Year Real Average Weekly Earnings Decreasing 3.1%

“Real average hourly earnings decreased 1.7 percent, seasonally adjusted, from December 2021 to December 2022. The change in real average hourly earnings combined with a decrease of 1.4 percent in the average workweek resulted in a 3.1-percent decrease in real average weekly earnings over this period.” (Bureau of Labor Statistics, Press Release, Accessed 1/12/2023)

‘[F]or Most Americans, The Price Of A Cup Of Coffee Or A Bag Of Groceries Hasn’t Budged’ As ‘Grocery Prices Remain Stubbornly High’

“[F]or most Americans, the price of a cup of coffee or a bag of groceries hasn’t budged…. Prices are still well above where they were a year ago. The headline consumer price index, which measures the cost of a wide variety of goods and services, is up 6.5% as of December, according to Labor Department data. Some price increases are eye-popping: The cost of large Grade A eggs has more than doubled, while the price tags for cereal and bakery products have climbed 16.1%. ‘There are some prices, some goods for which prices are falling,’ said Mark Zandi, chief economist of Moody’s Analytics. ‘But broadly, prices aren’t falling. It’s just that the rate of increase is slowing.’” (CNBC, 1/25/2022)

“Eggs, milk, butter, flour … if you were making pancakes last year, it would have cost you. Food prices surged in 2022. Grocery prices remain stubbornly high (and nearly double the rate of overall inflation) at 11.8% year over year, according to data released [January 12th] by the Bureau of Labor Statistics…. [A]nd none have been more rotten than egg prices: They’re up 59.9% year over year, a rate not seen since 1973 …” (“Egg Prices Exploded 60% Higher Last Year. These Food Prices Surged Too,” CNN Business, 1/13/2023)

 

Months Of Paying More For Everything Has American Households Eating Into Savings, ‘Sinking Deeper Into Debt,’ And Falling Behind On Payments

‘The Cushion Of Savings Many Built Up During The Pandemic Is Thinning Out [And I]n Some Households, It Is Already Gone’

“The cushion of savings many built up during the pandemic is thinning out. In some households, it is already gone. Americans have spent down about 35% of the extra savings they accumulated during the pandemic as of mid-January, according to an estimate from Goldman Sachs. By the end of the year, the company forecasts that they will have exhausted roughly 65% of that money. In 2020 and into 2021, a combination of government pandemic stimulus and reduced spending, for example on restaurants and travel, fattened Americans’ wallets. Households amassed $2.7 trillion in extra savings by the end of 2021, according to Moody’s Analytics. … Today, some people are having to cut back on their spending or add to their credit-card balances. Many have had to tap their savings to stay afloat, say economists.” (“Once Flush Savings Accounts Are Starting to Run Dry,” The Wall Street Journal, 2/06/2023)

Many Families Are Falling Behind On Their Bills And ‘Sinking Deeper Into Credit-Card Debt’

“More Americans are leaning on their credit cards in the face of rising prices. And as interest rates continue to climb, that debt is getting a lot more expensive. The average credit card user was carrying a balance of $5,474 last fall, according to TransUnion, up 13% from 2021…. With inflation outpacing incomes, more people are relying on credit cards to cover everyday expenses.” (“Americans Are Piling Up Credit Card Debt — And It Could Prove Very Costly,” NPR, 1/11/2023)

‘More Americans Are Falling Behind On Their Car Payments Than During The Financial Crisis’

“Now, more Americans are falling behind on their car payments than during the financial crisis. In December, the percentage of subprime auto borrowers who were at least 60 days late on their bills rose to 5.67%, up from a seven-year low of 2.58% in April 2021, according to Fitch Ratings. That compares to 5.04% in January 2009, the peak during the Great Recession. Higher interest rates are making it even more difficult to make the monthly payments. The average new auto loan rate was 8.02% in December, up from 5.15% a year earlier, according to Cox Automotive. The rate can be much higher for subprime borrowers.” (“Americans Fall Behind On Car Payments At Higher Rate Than In 2009,” Bloomberg, 1/27/2023)

‘A New Survey Found That Americans Living Paycheck To Paycheck Increased Over The Last Year’

“A new survey found that Americans living paycheck to paycheck increased over the last year, with nearly two-thirds of Americans reporting that they do so. About 64 percent of consumers said they were living paycheck to paycheck at the end of 2022, according to a report from Pymnts and LendingClub. The report found that the number is about 9.3 million more than the previous year and includes about 8 million people making more than $100,000 per year.” (“Survey: Nearly Two-Thirds Of Americans Are Living Paycheck To Paycheck,” The Hill, 1/30/2023)

 

As More Families Struggle, The Broader Economy Is Feeling The Effects

‘U.S. Consumer Confidence Unexpectedly Fell In January As Households Continued To Worry About The Economy's Prospects Over The Next Six Months’

“U.S. consumer confidence unexpectedly fell in January as households continued to worry about the economy's prospects over the next six months, a survey showed on Tuesday. The Conference Board said its consumer confidence index slipped to 107.1 this month from 109.0 in December. Economists polled by Reuters had forecast the index at 109.0. The survey places more emphasis on the labor market, which remains tight. Consumers' 12-month inflation expectations rose to 6.8% from 6.6% last month.” (“U.S. Consumer Confidence Ebbs In January; Inflation Expectations Rise,” Reuters, 1/31/2023)

‘The Engine Of The U.S. Economy—Consumer Spending—Is Starting To Sputter’

“The engine of the U.S. economy—consumer spending—is starting to sputter. Retail purchases have fallen in three of the past four months. Spending on services, including rent, haircuts and the bulk of bills, was flat in December, after adjusting for inflation, the worst monthly reading in nearly a year. Sales of existing homes in the U.S. fell last year to their lowest level since 2014 as mortgage rates rose. The auto industry posted its worst sales year in more than a decade…. Now the forces that helped keep spending high are unwinding, while inflation remains elevated.” (“The U.S. Consumer Is Starting to Freak Out,” The Wall Street Journal, 1/30/2023)

 

Yet President Biden Still Refuses To Take Responsibility For The Inflation Economists Agree Was Worsened By His Economic Policies

‘Inflation Is Still Well Above Normal Levels,’ Which Is ‘Way Too High For A Healthy Economy’

“Inflation is still well above normal levels, and the economy remains vulnerable to shocks that could send prices back up.” (The Washington Post, 1/12/2023)

“Data released [in December] by the Bureau of Labor Statistics showed that prices rose 7.1 percent in November compared with last year … figures [that] are way too high for a healthy economy …” (The Washington Post, 12/13/2022)

“Scorching-hot inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. The burden is disproportionately borne by low-income Americans, whose already-stretched paychecks are heavily impacted by price fluctuations.” (Fox Business, 12/13/2022)

But President Biden Defiantly Refuses To Accept Responsibility For Inflation That Occurred Entirely On His Watch

“Asked to explain, Biden … replied, ‘Our economy is strong as hell’ — as he munched on a waffle cone of Baskin Robbins chocolate-chip ice cream.” (“Biden Insists US Economy Is ‘Strong As Hell’ As He Munches An Ice Cream Cone,” New York Post, 10/16/2022)

REPORTER: “Do you take any blame for inflation, Mr. President?”
PRESIDENT BIDEN: “Am I taking blame for inflation?”
REPORTER: “Correct.”
BIDEN: “No.”
REPORTER: “Why not?”
BIDEN: “Because it was already there when I got here, man. Remember what the economy was like when I got here?  Jobs were hemorrhaging. Inflation was rising. We weren’t manufacturing a damn thing here. We were in real economic difficulty. That’s why I don’t.” (“Remarks by President Biden on the January Jobs Report,” Washington, DC, 2/03/2023)

REMINDER: When President Biden took office, inflation was 1.4% year-over-year, well below the Federal Reserve’s target of 2% inflation. (Bureau of Labor Statistics, Accessed 2/03/2023)

REMINDER: Economists And Analysts Have Repeatedly Explained That President Biden’s Economic Policies Made Inflation WORSE

“Economists largely agree that the pandemic stimulus and other spending bills Mr. Biden signed over the past two years have added to inflation … But the president made clear [in November] that he does not see a need to change course when it comes to the economy. While he may seek common ground with Republicans on some fiscal matters, such as relatively mild cuts to government spending, he is unlikely to turn sharply to a more centrist economic policy like his Democratic predecessors did.” (“An Inflation-Driven Midterm Will Not Change Biden’s Economic Focus,” The New York Times, 11/10/2022)

“Democratic candidates in competitive Senate races this fall have spent little time on the trail or the airwaves touting the centerpiece provisions of their party’s $1.9 trillion economic rescue package … Economists generally agree that the stimulus spending contributed to accelerating inflation …” (“Democrats Spent $2 Trillion to Save the Economy. They Don’t Want to Talk About It.,” The New York Times, 10/16/2022)

Democrat Economists: ‘I’m Not Sure That We Would Have The Inflation … Without The Overwhelming Stimulus That Was Applied Well Into Recovery — During 2021’

LARRY SUMMERS: “I’m not sure that we would have the inflation if there had never been a pandemic and, even if there had been a pandemic, without the overwhelming stimulus that was applied well into recovery — during 2021.” (“Summers Says Pandemic Only Partly To Blame For Record Inflation,” The Harvard Gazette, 2/4/2022)

“‘The United States has had much more inflation than almost any other advanced economy in the world,’ said Jason Furman, an economist at Harvard University and former Obama administration economic adviser, who used comparable methodologies to look across areas and concluded that U.S. price increases have been consistently faster. The difference, he said, comes because ‘the United States’ stimulus is in a category of its own.’” (“Rapid Inflation Fuels Debate Over What’s to Blame: Pandemic or Policy,” The New York Times, 1/22/2022)

‘A Chorus Of Economists Point To Government Policies As A Big Part Of The Reason U.S. Inflation Is At A 40-Year High’

“At a moment when stubbornly rapid price gains are weighing on consumer confidence and creating a political liability for President Biden, White House officials have repeatedly blamed international forces for high inflation … But a chorus of economists point to government policies as a big part of the reason U.S. inflation is at a 40-year high. While they agree that prices are rising as a result of shutdowns and supply chain woes, they say that America’s decision to flood the economy with stimulus money helped to send consumer spending into overdrive, exacerbating those global trends.” (“Rapid Inflation Fuels Debate Over What’s to Blame: Pandemic or Policy,” The New York Times, 1/22/2022)

“Many economists supported protecting workers and businesses early in the pandemic, but some took issue with the size of the $1.9 trillion package last March under the Biden administration. They argued that sending households another round of stimulus, including $1,400 checks, further fueled demand when the economy was already healing. Consumer spending seemed to react: Retail sales, for instance, jumped after the checks went out. Adam Posen, president of the Peterson Institute for International Economics, said the U.S. government spent too much in too short a time in the first half of 2021.” (“Rapid Inflation Fuels Debate Over What’s to Blame: Pandemic or Policy,” The New York Times, 1/22/2022)

 

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SENATE REPUBLICAN COMMUNICATIONS CENTER

Related Issues: Inflation, Economy