Breitbart Business Digest: Biden’s Incredible Recession

We just finished the first half of 2022 and we can’t say we’re going to miss it.

The stock market suffered its worst first half since 1970, with the S&P 5000 falling nearly 20 percent since the start of the year. The broad index is down 21% from its early January high and has been in bear market territory since early June.

A strong recovery following the bear market of the first quarter of the 1970s will give some relief. We are not sure. At that time, the effective rate of federal funds fell from 9.25% in December 1969 to 4.74% in December 1970. In other words, the Fed loosened its monetary policy. Now it’s the other way around: the Fed is quickly taking tightening measures to control inflation.

So we’re in an unusual situation where the economy will contract for the second consecutive quarter and the Fed raises rates.

Household spending slowed in May and rose just 0.2 percent this year, the smallest monthly increase ever. Economists had predicted a larger 0.5% gain. Last month’s earnings were revised down to 0.6% from 0.9%, suggesting that US consumer spending is lower than previously thought.

These figures do not take inflation into account. Adjusted for inflation, consumer spending actually fell 0.4% from the previous month. As we have repeatedly stated, most of the published prices of economic indicators in dollars largely concealed the real contraction. Americans spend more but earn less.

After the release of weak spending data, Wall Street economists struggled to cut their second-quarter gross domestic product forecasts. Expecting modest gains, S&P Global Market Intelligence is now forecasting a 0.7% decline. We look forward to hearing from all major banks in the coming days. Because growth forecasts are relatively low, revised forecasts are more likely to be negative.

The Atlanta Federal Reserve’s GDPNow model assumes a 1 percent economic downturn in the first quarter ended today. However, please note that the GDP Now tracker is not an inflation forecast, it is an estimate based on published public data. It’s not trying to predict what unpublished data will tell us about the economy. The result is a variable series; So when we get more economic data from April to June, it may return to positive territory.

The GDPNOW tracker is designed to show you what the latest data means for current economic growth. It does not attempt to forecast growth based on unpublished data. Therefore, if the incoming data is consistent with economic growth, the negative current value can be replaced by a positive value in the future.

The question of whether we are in a recession is everywhere. According to a very common rule of thumb, two consecutive quarters of an economic slump indicate that the economy is in a recession. We contracted 1.6 percent in the first quarter, so further declines in the second quarter fit that description.

However, there may not be an official retreat. The official mediator for when recessions will begin and end is a committee formed by a private organization called the National Bureau of Economic Research (NBER). NBER says that “the recession includes a significant slowdown in economic activity that spans the entire economy and lasts for more than a few months.” This is both more complex and more subjective than the two-quarter rule. And it is more flexible. The most recent recession in 2020 lasted only a few months, but it was so deep and overwhelming that NBER declared it a recession.

Of course, if we’re already in a recession, that’s weird. Unemployment is at a record low at 3.6 percent. As measured by the number of new jobless claims, layoffs are at levels we typically associate with a growing economy. Continuing unemployment claims are at levels not seen since the late 1960s. Vacancies remain at historically high levels, and employers continue to say they can’t find enough workers.

Does a strong labor market mean recession is impossible? Not necessary. Just as we escaped unemployment with little job growth after the Great Recession and the Financial Crisis, we can now go through an unemployment-free recession with little growth but few layoffs. Unless the collapse is brief, it probably won’t last long. If growth remains negative and consumer spending continues to fall, things are likely to suffer in the long run.

Meanwhile, the Biden administration continues to blame Putin for our economic problems.

President Joe Biden spoke at a press conference at the NATO summit in Madrid, Spain, on June 30, 2022. (Denis Doyle/Getty Images)

President Joe Biden, at the press conference at the NATO summit in Madrid today, said, “The reason for the increase in gas prices is in Russia. Russia. Russia. Russia. “The spell was unlikely to work because he forgot to turn around and tap his nose three times while writing the spell.

White House / YouTube

As we mentioned earlier, only 11 percent of Americans blame Putin for the high price, and Russia’s insistence will not change that. The increase in Russia’s supply from the global market is a contributing factor to higher oil prices, but the large increase is almost inexplicable.

In any case, reasonable people may wonder why a country that once prided itself on energy independence now has such a fragile fuel market that a war between Russia and Ukraine could destroy it. Abundant domestic fuel production should protect us from such international turmoil. So the Biden administration and its allies in government and finance (we’re talking about you investors and ESG fund managers) have left us at the mercy of Vladimir Putin’s foreign policy.