Biden’s Terrible Week: Real Wages Fall as the Economy Shrinks

The economy unexpectedly shrank, a key inflation gauge rose 5.2 percent and real wages continued to shrink in a disastrous week for the Biden-Harris administration and Democrats in Congress. 

WSJ Editorial: Americans have good reason to be anxious amid rapid inflation, and on Thursday they received another one. The U.S. economy shrank in the first quarter of 2022 by 1.4%, the first decline since the pandemic lockdown recession in the first half of 2020. The question is whether this is, well, transitory, or the sign of stagflation or a recession to come. . .

The GDP decline also coincided with an accelerating rise in prices. The GDP price index rose at an 8% annual rate on top of 7.1% in the previous quarter. The Fed’s preferred inflation measure, personal consumption expenditures, rose 7%, when its target is 2%. . . Also bad news is a year-long decline in real disposable income.

Joe Biden’s dismal approval rating was already giving Democrats anxiety about the upcoming midterms, and an avalanche of bad economic news is likely to make their situation even more precarious. 

Politico: Democrats need to be ready to contend with Republicans ready to hammer them over the growth slowdown, which, coupled with high inflation and rising interest rates, may start to feel more like malaise, he added. . .

Republicans jumped on the news.

“Accelerating inflation, a worker crisis, and the growing risk of a significant recession are the signature economic failures of the Biden Administration – and will likely get worse,” said Rep. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee.

Democrats’ proposals to solve the economic slowdown and rising prices are likely to actually exacerbate the problems. Congressional Democrats say they plan to “bypass Republicans and ram corporate and individual tax increases through the Senate” — a “backward” strategy — and Biden’s reported plan to cancel student loan debt is likely to fuel inflation.

Bottom Line: Biden and Democrats in Washington have wrecked the economic recovery — that’s why voters overwhelmingly trust Republicans more to control inflation and manage the economy.