Americans’ Painful Economic Reality Is A Far Cry From Joe Biden’s Out-Of-Touch Spin

President Biden Keeps Boasting That ‘The Biden Economic Plan … Is Actually Working’ And ‘Families Are Breathing Just A Little Bit Easier’

PRESIDENT JOE BIDEN: “I don’t think it’s unfair to say that this is all evidence that the Biden economic plan … is actually working. It’s working.” (“Remarks by President Biden on Economic Progress Since Taking Office,” Springfield, VA, 1/26/2023)

• BIDEN: “We’re on the right track. Roads and bridges are being built. Factories are coming online. People are back to work. Families are breathing just a little bit easier, as my dad would say.” (“Remarks by President Biden on Economic Progress Since Taking Office,” Springfield, VA, 1/26/2023)

WHITE HOUSE PRESS SECRETARY KARINE JEAN-PIERRE: “[T]he President and the Vice President will travel to Philadelphia, Pennsylvania. They will discuss the progress we have made and their work implementing the Biden-Harris economic agenda that continues to deliver results for the American people…. And if you think about his [economic] plan, it is working. It is indeed working.” (White House Press Briefing, 1/27/2023)

In Reality, ‘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)

• “Consumer spending accounts for roughly 70% of the economy. A downshifting consumer is a key reason that business and academic economists polled by The Wall Street Journal, on average, put the probability of a recession in the next 12 months at 61%.” (“The U.S. Consumer Is Starting to Freak Out,” The Wall Street Journal, 1/30/2023)

“The share of monthly income Americans set aside for savings was 3.4% in December, down from 7.5% a year earlier and from a record high in April 2020. Credit-card interest rates have been rising, and Federal Reserve officials have signaled that they plan an additional quarter-percentage point increase to the central bank’s benchmark rate this week. That would bring the rate to between 4.5% and 4.75%, from near zero at the start of last year.” (“The U.S. Consumer Is Starting to Freak Out,” The Wall Street Journal, 1/30/2023)

“Mortgage rates reached a 20-year high last fall. Some 57% of consumers were concerned about making housing payments in the fourth quarter, according to a survey by Freddie Mac, up from 48% in the third quarter.” (“The U.S. Consumer Is Starting to Freak Out,” The Wall Street Journal, 1/30/2023)

“Credit-card balances were up 15% on the year in the third quarter, according to the Federal Reserve Bank of New York, the largest increase in more than two decades.” (“The U.S. Consumer Is Starting to Freak Out,” The Wall Street Journal, 1/30/2023)

“U.S. factories, shippers and importers are pulling back, a sign they anticipate less demand from Americans in the months ahead. Inbound volumes at the ports of Los Angeles and Long Beach in California were down 20.1% in December from a year earlier, and have been behind 2019 levels since August. A little over a year ago, backlogs at ports were drawing President Biden’s attention.” (“The U.S. Consumer Is Starting to Freak Out,” The Wall Street Journal, 1/30/2023)

‘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)

Inflation Remains High And Energy Prices Are Climbing Again

“Annual inflation, as measured by the consumer-price index, remained above 5% in December for the 19th straight month, the longest such streak since the early 1980s.” (“The U.S. Consumer Is Starting to Freak Out,” The Wall Street Journal, 1/30/2023)

‘Economists Say Consumers Should Expect Their Electric Bills To Continue Rising At A Fast Pace’

“[O]ne costly item isn't expected to get cheaper anytime soon: electricity. Economists say consumers should expect their electric bills to continue rising at a fast pace as liquified natural gas, a key fuel for generating electricity, remains in short supply in the U.S. and companies' operating costs rise. Average U.S. electricity prices could rise at a 10% clip again this year and possibly next, predicts Mark Wolfe, director of the National Energy Assistance Directors Association … ‘It’s fair to say, in aggregate, we’ll see upward pressure for 2023 on the cost consumers pay for electricity,’ said Dallas Federal Reserve economist Jesse Thompson.” (USA Today, 1/24/2023)

“Electricity rates in Illinois, for example, could continue to surge following a rise last year. The utility ComEd has asked state regulators for a record $1.5 billion in price hikes over the next four years, starting in 2024. If that next round of hikes wins approval, household electric bills in Illinois would increase by an average of $4.25 a month each year, for a cumulative increase of $17 a month by 2027…. Electricity rates are also rising elsewhere. While Illinois saw the third-largest percentage increase (32%) last year, New Hampshire and Hawaii took the top two spots at 40% and 38%, according to a survey released earlier this month by Texas electric power company Payless Power.” (USA Today, 1/24/2023)

“More than 75% of Americans were concerned about their ability to pay their utility or electric bills, with 51% shopping less to budget for the cost and one-quarter getting a second job to cover the expense, Payless Power said.” (USA Today, 1/24/2023)

‘Gas Prices Are Rocketing Higher’ And Could Be Back To $4 Per Gallon ‘As Early As March’

“Normally, prices at the gas pump drift lower during the dead of winter as lousy weather keeps Americans off the roads. But something unusual is happening this year: Gas prices are rocketing higher. The national average for regular gas jumped to $3.51 a gallon on [January 27^th], according to AAA…. [G]as prices have increased by 12 cents in the past week and 41 cents in the past month. All told, the national average has climbed by more than 9% since the end of last year – the biggest increase to start a year since 2009, according to Bespoke Investment Group.”  (“Why Gas Prices Are Surging This Month,” CNN Business, 1/27/2023)

• “AAA says some states have experienced much bigger gains over the past month, including Colorado (98 cents), Georgia (70 cents), Delaware (62 cents), Ohio (60 cents) and Florida (59 cents).” (“Why Gas Prices Are Surging This Month,” CNN Business, 1/27/2023)

“Andy Lipow, president of Lipow Oil Associates, expects the national average will hit $3.65 a gallon heading into the spring. Patrick De Haan, head of petroleum analysis at GasBuddy, worries the typical springtime jump in prices will be pulled forward. ‘Instead of $4 a gallon happening in May, it could happen as early as March,’ De Haan told CNN. ‘There is more upside risk than downside risk.’ A return of $4 gas would be painful to drivers and could dent consumer confidence.” (“Why Gas Prices Are Surging This Month,” CNN Business, 1/27/2023)

Far From Breathing Easier, 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’

“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)

• “Multiple polls show American consumers sinking deeper into credit-card debt. A new survey from Bankrate, the consumer finance company, found 46 percent of cardholders carrying credit-card balances from month to month, up from 39 percent a year ago. A survey by NerdWallet, the personal finance company, found the average U.S. household carrying $7,486 in credit-card debt, a 29-percent increase from a year earlier. A third poll, from the personal finance website GOBankingRates, found that 14 million Americans owe more than $10,000 in credit-card debt.” (“A Growing Number Of Americans Face Potentially Crippling Credit-Card Debt,” The Hill, 1/21/2023)

“The share of credit card users who carry a balance has increased to 46% from 39% a year ago, according to Bankrate. ‘Almost half of card holders are carrying debt from month to month,’ [Bankerate’s Ted] Rossman says. ‘And that debt is as expensive as ever.’ Lower-income cardholders are more likely to carry a balance. But even among people making $100,000 a year or more, 37% don't pay the their credit card bill in full every month.” (“Americans Are Piling Up Credit Card Debt — And It Could Prove Very Costly,” NPR, 1/11/2023)

• “The average interest rate on credit card debt has soared to nearly 20%, from just over 16% at the beginning of last year. That's the largest one-year increase in the four decades Bankrate has been tracking rates.” (“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)

Americans’ Economic Experiences Don’t Reflect The Rosy View From The White House

‘Everything I Do Just Feels Like I’m A Lot Poorer,’ ‘I Am Every Day Alarmed At How Much It’s Costing Me To Put Food On The Table’

OHIO: “Jazzlyn Millberry, 33, has been looking for big ways to make cuts. One day last fall, her banking app informed her that the cost of one month’s groceries and household goods for her family of four had risen to $900, from about $600 or $700. ‘I find myself now going to three or four different grocery stores just to get the best deals on things to save on costs,’ said Ms. Millberry, a health-insurance claims analyst in Pickerington, Ohio. On one recent outing, she stopped at Kroger for eggs and meat, Aldi for produce, Sam’s Club for her children’s snacks, and Target for toilet paper. Even as she has cut back on groceries, restaurants, hairstyling and facials, her credit-card balances have grown in the past several months. She said she started making only the minimum required payment on her credit cards.” (“The U.S. Consumer Is Starting to Freak Out,” The Wall Street Journal, 1/30/2023)

ARIZONA: “The large stock-market declines over the past year also alarmed consumers, including Scottsdale, Ariz.-based Sara Laor, who is 57 years old. Ms. Laor said the declines depleted the holdings in her 401(k) and IRA accounts by nearly 40%. Over the past year, her family has had to dip into their savings to pay for essential car and plumbing repairs. They are putting off other expenses, like buying a new car, and have given up ordering in meals. She’s trying to spend more cautiously, shunning recipes involving pricey eggs and buying more canned food. ‘Everything I do just feels like I’m a lot poorer: Can I do this or can I do that?’ she said.” (“The U.S. Consumer Is Starting to Freak Out,” The Wall Street Journal, 1/30/2023)

MINNESOTA: “Recent layoff trends worry Benjamin DeLong, a 32-year-old customer-account manager at an industrial manufacturer in southern Minnesota. His savings rose to $3,700 during the pandemic, thanks in part to government stimulus. He is now down to about 3 cents. Mr. DeLong said he had to dip into his savings to cover the rising costs of his groceries, utilities and car insurance.” (“The U.S. Consumer Is Starting to Freak Out,” The Wall Street Journal, 1/30/2023)

NEW YORK: “[F]reelance editor and mom [Fran Carpentier of Manhattan] said milk is constantly draining her wallet. ‘Did the cows go on strike and I missed it?’ she said. ‘I pity anyone who’s raising young children and has to buy a lot of milk.’ Lately, she’s been cutting back on bovine-based grub, including butter and steak, due to sky-high supermarket prices. ‘I am every day alarmed at how much it’s costing me to put food on the table,’ she said — adding that even her Thanksgiving dinner was more sparse. ‘This year, I just didn’t go as crazy as I normally do.’” (“New Yorkers Tell Painful Tales Of Inflated Food Costs While Grocery Shopping,” New York Post, 1/12/2023)

NEW YORK: “To save money at the market, … 63-year-old nanny [Dianne Paige of Nassau] substitutes meat-centric meals for pasta several times a week. ‘I’m not buying in bulk like we used to, especially ground beef. Beef is crazy [expensive],’ she said. ‘I’m buying a lot less meat.’ Along with forgoing the burger staple, she said she eats more leftovers and tries to waste less. ‘Where we used to go to the supermarket every week, I don’t do that anymore. We try to stretch everything out and [go] every other week,’ she said. ‘We cook for two days, three days, and that’s what we eat. We do more pasta. Just making adjustments.’” (“New Yorkers Tell Painful Tales Of Inflated Food Costs While Grocery Shopping,” New York Post, 1/12/2023)

Farmers And Small Business Owners Are Struggling With High Prices For Supplies And Customers Who Have To Cut Back On Spending

KENTUCKY: “Stephen Fister is one of the family owners of Bi-Water Farm and Greenhouse in Scott County [Kentucky]…. [H]e’s focusing on raising ferns. Fister says he’s dealing with natural gas and electricity prices doubling. Seeds, fertilizer and diesel prices have increased as well. ‘There’s no way on cutting down on those products that we use, there’s no way of cutting down or cutting back on them, and we have to have them to them, so they are there. They are a fixed cost,’ said Fister. Right now, a fern costs $20. Fister says ferns two years ago cost $3 or $4 less.” (“Inflation Continues To Impact Grocery Store Prices In Kentucky,” WKYT, 1/11/2023)

NEW YORK: “Mikhail Andersson, owner of First Class Tattoo in New York City, has seen signs of weakening demand. After it was cleared to reopen from lockdowns in the summer of 2020, his business was slammed by customers flush with unemployment insurance payments and stimulus checks. In mid-November of last year, Mr. Andersson started getting calls from clients who had booked daylong tattoo sessions, saying they could only afford shorter ones or pulling out altogether. Mr. Andersson, who specializes in tattoo projects that often take five or six all-day sessions to complete, had 15 cancellations for full-day slots in December. ‘In my 15 years doing this, I’ve never seen that—people calling up and saying they don’t have the money to spend right now or can only afford an hour because their current situation is pretty bad,’ he said.” (“The U.S. Consumer Is Starting to Freak Out,” The Wall Street Journal, 1/30/2023)