If German Greens can do it, why not America? This rewards the wrong state and is not ideologically sound. Cheaper energy means not green sources of energy, although recent German moves could justify using West Virginia coal again. America must on-shore more manufacturing, more components of the supply chain and expand energy production to provide cheaper energy inputs. The other option is the one that we know ideologically they cannot enact. Maybe climate credits for urbanites without cars will be a way to thread the needle to fund the in-group and boost spending under cover of green goals. This option is gone, but the bureaucrats in DC will have to find a new mechanism for such a transfer of wealth or new debt trap. These loans funded consumer spending for years. As many news articles reported, students were often approved for more money than the classes they signed up for cost and were encouraged to take the fully allocated amount. The expansion of student debt in the Obama era was by over $100 billion in six consecutive years.
#GOLDILOCKS ECONOMY CREDIT OBAMA HOW TO#
How to address this? One option is to paper over this with some backdoor financial pass through for consumers. Metrics will be manipulated to prevent outright confirmation of the worst stagflation fears for television focused Americans, but the truth will be undeniable. All left-wing special interest groups have been paid off for their service in 2020.
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Trillions have been tapped so that states do not face the music for their prolific spending and pension nightmares. There is no political will for more covid checks as covid itself is now endemic and in a new phase of the pandemic. Note that the flood of illegals will strain social service consumption, requiring more funds to states and even the health care sector. Customer service has declined since covid hit, and we will likely not see a return to pre-covid days except for those who can pay for it with higher priced goods and services.Īmerica will face generational highs in inflation as it faces rising pink slips. Not reported is that these firms were already not backfilling for Boomer retirements this calendar year as outlooks changed early on for the economy with the rise in inflation in late ’21 and the Russian sanctions throwing everyone into confusion. Auto parts suppliers will face adverse future planning. Consider the down-market effects for all contractors and vendors of Big Tech and Ford. Ford is laying off 8,000 as it transitions to EV production. Big firms are not immune either as Big Tech is now pumping the brakes. Small business revolving debt has risen in cost as have all raw inputs.
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Almost half of small businesses have frozen hiring plans. We are a service economy after all, so this should start showing up in employment (a lagging indicator). Discretionary consumer goods will take the brunt of this but so will discretionary services. Consumers are reacting by shifting spending to needs rather than discretionary items. This is all while student loans are still on pause. Auto loan delinquency is rising for all under age 40. Each notch higher on the interest rate ladder means some marginal borrower is now unable to spend money.
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It’s sort of working as rates rise, choking off consumer credit and increasing the cost of borrowing. To combat inflation, the FED is going to destroy demand. Along with small covid relief checks, this pushed dollars all around in a moment of supply chain dysfunction. The Biden admin made the infrastructure spending even worse by slapping on environmental regulations and requirements to make those projects much slower to roll out. Biden’s team made things worse with the non-infrastructure infrastructure bill that was another trillion spread out over many departments and economic sectors with maybe a quarter to actual infrastructure. It has been analyzed elsewhere, and the obvious angle is that a second term Trump would not have played as nicely with those blue states that stayed locked down compared to others (blue and red) that re-opened in various degrees. This was an electoral thank you to the states that locked down the hardest in 2020 to sabotage the election. Adding fuel to the fire was the muni and state bailout of ’21. Inflation was baked into the cake with the massive multi-trillion dollar 2020 covid aid package. Whether Thursday’s GDP report confirms it, the recession is coming, and in some spots, already here.
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The Goldilocks soft landing or muddle through option is the dream, but it is hard to look at data and see it as an emerging reality. The Fed stated repeatedly in interviews that they were going to do everything to rein in inflation.