Americans have good reason to be unhappy with President Biden — the economy stinks.
In the State of the Union, Mr. Biden waxed about GDP soaring and unemployment falling, but abstract statistics pale against voters’ everyday experience. Slow-growing paychecks aren’t keeping up with soaring electricity, gasoline and grocery prices.
Laughable were early denials and now the remedies offered by the Federal Reserve, Treasury and woke West Wing ideologues masquerading as professional economists.
Cecilia Rouse, chair of the President’s Council of Economic Advisors, asserts inflation will subside within months. However, the omicron variant of COVID-19 is ripping through cargo ship crews and along with rising fuel costs, that translates into higher freight rates and more, not less, inflation.
How that’s going to bring down the price of furniture or eggs evades my expensive education in economics but not Dr. Rouse. She gets one dunce cap for her analysis. Treasury Secretary Janet Yellen tells us Build Back Better will solve the labor shortages, but it would raise the cost of childcare for middle-class professionals over the next few years. Ms. Yellen is more experienced and should know better. She gets two dunce caps.
The president and his team have persistently claimed monopolies are causing inflation. Mr. Biden has instructed the FTC to investigate oil companies and accuses meat processors of anticompetitive practices. In February, he announced 72 initiatives across a dozen agencies to boost competition.
Where were all those monopolies when Donald Trump was president? Did they magically cartelize the American economy between Election Day 2020 and Inauguration Day 2021?
I can’t get an audience with Mr. Biden, but I think it’s fair to anticipate he has no good answers for those questions. He gets a provisional three dunce caps.
As an economist, I am compelled by convention to back up my words with numbers. For the year ending in February, consumer prices were up 7.9 % while wages increased only 5.8%.
That’s not huge, but those wage gains are only averages. Pandemic demand and stimulus spending benefited the wages of finance and high-tech workers, nurses and several other specialties — most other workers’ wages lagged behind.
Importantly, most folks get their pay adjusted annually, but businesses can raise prices quickly and lately have been. That’s a key source of rising worker resignations — often, the only way to beat inflation is to switch jobs.
CEOs are taking double-digit pay increases while magnanimously announcing they will increase white-collar pay by about 4.4% this year. What’s it like to be a loan officer, teller or work the IT help desk at Bank of America where Brian Moynihan is taking $32 million? He scores one oink.
Not to be outdone, new Apple phones are terribly expensive but no longer include chargers and headphones. That disguises how much prices have jumped. After golfing, yachting and ordering up the corporate jet, shrinkflation — fewer potato chips (silicon wafers) in the same wrap is a favorite CEO pursuit.
Take comfort America, it’s all for a good cause. Tim Cook is taking $99 billion in compensation — he gets two oinks.
Investment bank and private equity traders are grasping millions in pay jumps but how do we grade a whole class? At business schools, we like group projects. For their collaborative efforts, the professor awards three oinks.
Most concepts in economics are terribly inaccessible, but some are not. If the economy is experiencing shortages because the government is bent on handicapping the oil and gas industry, shipping lanes are clogged and work-at-home shifts spending from sandwich shops to home computers and printers, the government printing more money will bid up prices.
Mr. Biden financed his $1.9 American Rescue Plan with help from the Federal Reserve printing money to purchase new Treasury securities.
A true believer in woke economics — spend too much and tell Americans it’s good for them — the president is dipping into his diversity list for new Fed governors with a strong bias toward printing money and manufacturing more inflation to create tight labor markets.
Worst among them, Liza Cook can’t tolerate ideas different from her own. She wanted the editor of the prestigious Journal of Political Economy removed for criticizing the defund-the-police movement.
Americans can see two things plainly. Tight labor markets and inflation are sending them to the poor house, and the country is being run by donkeys for the benefit of pigs.
It’s time to end this “Animal Farm” tale, but the midterms are still eight months away. I shudder to think what more damage can be accomplished before those provide our reckless septuagenarian president with some competent adult supervision.
• Peter Morici is an economist, emeritus business professor at the University of Maryland and national columnist.