Since no one else will say it, we will. The recession is here. To borrow a metaphor from Jamie Dimon, the hurricane has smashed onto the coast. The economy hit a wall in early June and keeps nosediving.
The stock market sell-off, the collapse in small business confidence, the steeply falling forecast for second-quarter GDP growth (which is now a big fat zero), the lousy housing numbers, and the drop in consumer sales are all pointing south. Inflation at 8 to 10 percent is a prosperity killer as. We’ve been warning for about 10 months.
We are normally happy warriors, but our view is it will be very damaging unless we see a radical change of direction in policy from the Fed and the White House and from Congress, this could be calamitous.
It’s especially heartbreaking because if Trump had been re-elected, the economy would be sprinting over the hurdles. It’s also sad because for two years now all we have heard from Biden and the radical big-government Democrats is a campaign for “social justice,” “equality,” and “ending so-called systemic racism.” Yet, Bidenomics is causing the biggest reduction in the real wages and salaries of the lowest income Americans with minorities getting hit the hardest. Recessions bring deep divides between rich and poor. Prosperity lifts all boats.
We will have much more on this on the days and weeks to come. But for now, our goal is to make sure that panicked decision-making in Washington doesn’t dig the hole deeper. That is what happened in response to the financial collapse of 2008 (when the government began a massive campaign of bailouts of banks, financial services, and housing). That is what happened in the first four months of Covid when catastrophic decisions to lock down businesses and then spend trillions of dollars trying to keep the economy functioning caused great long-term damage.
Cutting deals with Pelosi and Biden will only make things worse and prolong the recession.
The best thing that could happen right now would be for Biden, Kamala, and Pelosi to immediately resign- but that isn’t going to happen. Best for republicans to come up with a very bold agenda for growth and run on it in 2022 and 2024.
The left in the U.S. and across the globe has been yelping for a “great reset” of the capitalist system – by which they mean a wholesale repudiation of free-market economics. Biden even boasted that Milton Friedman isn’t calling the shots anymore.
That’s right. How do you like it?