Bad News for Biden (and America): Commerce Department Releases Brutal New Economic Data

On Friday, January 28th, the Bureau of Economic Analysis, within the US Department of Commerce, released its latest report on economic metrics, and it was, to say the least, not pretty. Some highlights:

The PCE (a measure of the cost of goods used primarily by individual consumers, so a good measure of what the average American is spending) rose a stunning 5.8% last year. That means American’s are spending nearly 6% more to buy the same basic household goods this year as we were last year.

While consumer prices are up, consumer spending was down 0.3% in December. This means consumers are actually buying fewer items. The BEA data suggest declines in car, electronics, and clothing purchases spurred this decline. 

American’s personal income rose a measly 0.3%. That was slightly under the average for the previous four months and was also 33% less than the monthly rise in prices. The annualized version of these rates suggests that Americans are trying to buy household goods that cost 5.8% more with a paycheck that is 3.6% bigger. Not exactly a receipt for prosperity. 

So to summarize, Americans are spending less money to pay higher prices, with incomes that are nowhere near where they need to be to keep up with inflation.

But America, it gets worse.

So far, inflation has been somewhat mediated by a fast-growing post-pandemic economy, but the party may soon be over. The Federal Reserve, in response to the bad economic news, is scaling up its interest rate hikes to counter inflation. Now, while rate hikes are usually necessary to reduce available capital and thus to fight inflation, they also cause the economy to slow down, as all the money is sucked away. The upshot of this is that, if these rate hikes go through, Americans will find it harder to get loans, start a business, etc. because of the high-interest rates necessitated by Biden’s inflation.

With data like this, it’s no wonder the stock market is down nearly 7% this month.  

But if you need to cheer up after reading all that horrible economic data, at least you can laugh at this unintentionally hilarious sentence in the BEA report:

Talk about a suspicious use of quotation marks.