While President Biden insists that his economic programs work great, there are many troubling signs, including the rate at which consumers spend. The simple rule is that if people buy more, it usually means they are happy about their economy and finances.
People tighten their belts when they don’t have the money to buy more than what they need or because they fear the future.
The “engine of the economy”, as consumers spend, is often referred to. But it’s running out of gas. According to the Wall Street Journal, Americans are “freaking out”.
In three of the last four months, retail purchases have declined. After adjusting for inflation, December saw flat spending on services including rent, haircuts, and bulk of bills. This was the lowest monthly reading in almost a year. The U.S. saw a decline in sales of existing homes last year, which was the lowest since 2014. This is due to rising mortgage rates. The auto industry had its worst year in over a decade.
In the second half 2020, when the pandemic was at its peak, consumer spending rose. A locked-up population purchased new TVs, exercise bikes and computers to spend their time away from home. The stimulus checks were then introduced, which provided billions of dollars in government money. When a fat, unexpectedly arrived check arrives in the mail, who feels guilty about buying a little bit of something?
These days are gone. Consumers are now wary about taking out high-interest credit cards and borrowing six percent on their cars, as Biden’s inflation is the norm. High mortgage rates have risen to a 20-year peak, increasing monthly payments by hundreds of thousands or even thousands. This has caused a decline in housing sales. The Federal Reserve indicated that another rate increase could be imminent this week.
Why is consumer spending so important to us? If consumer spending doesn’t pick back up soon, we could soon be in recession (assuming that it isn’t already).
Around 70% of the economy is accounted for by consumer spending. The Wall Street Journal polled 61% of academic and business economists to determine the likelihood of a recession within the next 12 months.
The unemployment rate, which is currently at 3.5 percent, is one of the few economic indicators that is positive. However, retail and tech giants like Amazon, Meta and Google have recently announced mass layoffs. Other companies are also laying off temporary workers, and it is taking longer for people to find work.
These conditions have been created by Biden’s excessive drinking and Inflation Reduction Act.
