The White House and the media have worked very hard to sell the idea that the economy is in good shape and that inflation really isn’t that bad; and if it is that bad, it’s because the economy is growing. They have also attempted to convince Americans that the supply line crisis is due to Covid. Hopefully Americans are waking up to the fact that neither one of those things is true.
On Wednesday, The Conservative Treehouse posted an article that provides a much more honest assessment of where the American economy actually is. It is a rather long article, so I suggest that you follow the link and read the entire article. I will try to summarize some of the major points.
The article reports:
The business and financial wires are melting down today as ADP Payrolls, the nation’s largest private sector payroll providing service, releases data from January showing a drop of 301,000 jobs. [ADP Raw Data Here]
The financial, economic and business pundits are completely caught off guard and using the words “shocked”, “unexpected” and “surprised,” within their analysis. These employment numbers just don’t align with an economy growing at 6.9%, as measured by the Bureau of Economic Analysis (BEA). However, for CTH readers who have carefully scrutinized the economic claims and looked at the bigger picture through the prism of kitchen table checkbook economics, these results are not a surprise.
Every sector of the employment picture on Main Street USA is hit. The pundits, following the narrative first seeded by the White House on Monday, are pointing to Omicron as the justification inside their review. That’s nonsense. For the better part of seven months these same pundits first claimed Delta, then shifted to Omicron as a way to explain the structurally weak economy. All of that is nonsense.
What we are witnessing are the outcomes of massive inflation now hitting the labor market. A drop in demand, and a subsequent drop in the employment of goods and services, is an unavoidable outcome of inflationary pressure on wages.
Let me say it again, on a macro level, natural consumer DEMAND has dropped – we are only now starting to see it surfacing in the statistical measures.
This is why White House spokesperson Jen Psaki made that weird statement on Monday.
The article concludes:
We are in the inflation hurricane right now.
The good news is… if domestic demand continues naturally contracting, due to unsustainable inflation, eventually prices will have to stabilize. It seems counterintuitive, but a strong cash position is valuable despite inflation right now.
Inflation will continue hitting wages hard, but there is light at the end of the tunnel. If you have prepared to ride out this storm of inflation, we should see things start to turn around in about six months. Unfortunately, between now and then, there will be significant job losses as inventories continue to build and sales get stagnant.
Prices on fast turn consumable goods like food, fuel, energy etc. will never return to their pre-inflationary price. The high prices on highly consumable products are here to stay and will never decline. Unfortunately, there are several indicators that those prices will go even higher throughout the next six months until they plateau mid-summer.
However, on the backside of this inflationary hurricane, the prices on long-term durable goods will start dropping sooner as consumer demand continues to focus on prioritization of spending and employment becomes more tenuous.
Please read the entire article. It includes a couple of charts that illustrate exactly what is happening to our economy under the economic policies of the Biden administration.
