The Biden Team’s Sad State of Denial

By Jim Geraghty

Thursday, July 14, 2022

 

White House press secretary Karine Jean-Pierre, one week ago:

 

JEAN-PIERRE:  I don’t think it’s that our plan is not popular with the American people.  We know that the American people are feeling the high costs.  We understand what they are feeling.  Because — because when you look at inflation; when we look at where we are economically — and we are in a strong — we are stronger economically than we have been in history; when you look at the unemployment numbers of 3.6 percent; when you look at the jobs numbers — more than 8.7 million of new jobs created — that is important.

 

You just can’t spin your way out of a problem this large. You can’t fool people into thinking their grocery bill isn’t all that high, that filling up their tank doesn’t cost way more than a year ago, that their 401(k) hasn’t shrunk, that their hopes of buying a house aren’t more challenging, and that they aren’t feeling squeezed.

 

Overall, the economy is in a lousy spot right now. That low unemployment rate that Jean-Pierre likes to cite is preferable to a high unemployment rate, but it also reflects a serious and ongoing labor shortage; there are 11.3 million unfilled jobs in the country in the most recent figures – down a bit from the peak of 11.8 million in March, but still high by historical standards. Worker shortages are creating problems for construction and infrastructure projects, tampon production (!), pools and summer attractions, and even Independence Day fireworks displays.

 

Last month, a monthly measurement of small-business optimism reached an all-time low. “Small business owners expecting better business conditions over the next six months decreased seven points to a net negative 61 percent, the lowest level recorded in the 48-year survey. Expectations for better conditions have worsened every month this year.”

 

The Atlanta Fed’s projection for GDP growth in the most recently completed quarter is negative 1.2 percent – which would make two consecutive quarters of negative GDP growth, the traditional definition of a recession. As I have noted, there is a good chance that, on the morning of July 29, the headline will be, “U.S. Now in Recession.”

 

The silver lining to that dark cloud would be that a recession would end the inflationary cycle – but then the country is left dealing with the problems of a recession instead of the problems of an inflationary cycle.

 

It is good that gas prices have come down about 40 cents since mid-June. But this is largely because of declining demand; “according to new data from the Energy Information Administration, gas demand dropped from 9.41 million barrels per day to 8.06 million b/d last week, while total domestic gas stocks increased by 5.8 million bbl (barrels of crude). The price of gas is coming down in part because Americans are choosing to not drive around on summer vacation the way they usually do. The problem is that our refinery capacity isn’t increasing, and in fact another refinery is scheduled to shut down at the end of 2023, or perhaps even earlier. So that problem isn’t likely to go away anytime soon.

 

America will get through this; we’ve gotten through worse. But we’ve got a long, difficult slog ahead, and the Biden team isn’t doing anyone any favors by pretending that the economy is in great shape and that good times are just around the corner.