Biden's recession

 Kenin M. Spivak:

The Biden administration has huffed and puffed its adherence to progressive dogma and, as a result, it is about to blow down the American economy. The situation won’t improve until the Administration resolves its catalepsy.

In March, I described the substantial risk that America was heading toward a recession. A recession may already have begun, and it will certainly soon do so if the Biden White House does not immediately change course on energy and spending.

In June, U.S. and European economies slowed sharply as surging prices weakened demand. U.S. retail sales fell in May, and existing home sales have declined for four consecutive months. Economists surveyed by the Wall Street Journal put the risk of a recession in the next 12 months at 44 percent, a level usually seen only on the brink of, or during, recessions.

The classic definition of a recession is two consecutive quarters during which Gross Domestic Product (GDP) declines. The U.S. has just completed one quarter during which GDP declined at an annual rate of 1.5 percent. The Federal Reserve Bank of Atlanta is projecting a flat second quarter. If results tilt down by just one dollar, that would make two consecutive quarters of decline.

The National Bureau of Economic Research, a private, non-profit research organization that makes the official determination for the United States government, defines a recession as a “significant decline in economic activity that is spread across the economy and lasts more than a few months.”

NBER declared recent recessions in 2008, and 2001. It also declared that a brief recession commenced in February 2020, following Covid-19 lockdowns. Because NBER awaits a range of data to determine the start and end of a possible recession, it generally takes from four to 21 months after a recession commences or ends for NBER to make a determination.

The indicators of a recession I described in March have come to pass: rising interest rates (including the largest Federal Reserve rate increase since 1994), soaring inflation (now at the highest rate in 41 years), an inverted yield curve, and out-of-control federal borrowing. Supply chain problems, Russia’s invasion of Ukraine and concerns about the war spreading, dislocations to global energy and food markets, and the rapid growth in U.S. crime rates contribute to uncertainty and the difficulty of resolving the situation. Beyond these factors, the U.S. dollar is under siege as the world’s reserve currency by both China and Russia, reducing the government’s ability to control global events through U.S. policies.

On top of that, the S&P 500 declined 20.6 percent for the first six months of the year, its worst performance since 1970. For the same period, the Dow Jones fell 15.3 percent, and the Nasdaq Composite fell by 29.5 percent.

Even if the U.S. does not fall into recession, stagflation may be a greater risk than suspected. Stagflation occurs during periods of low growth and high unemployment. We have the first, but not the second—yet—though the steps being taken to combat inflation may reduce jobs. It is difficult to end stagflation, which slows the growth of investments, jobs ,and real wages, and may easily dip into recession.
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With Biden, we have an economically illiterate President when it comes to the causes of recession that he is responsible for.  It looks like Biden inflation is going hand in hand with recession.