NY Times Says Coming Economic Pain Is Going To Hurt

The economy is pretty much the first thing on everyone’s mind, right? In the mind’s of the Trump Deranged Media, it’s January 6, which are the top 5 stories on the NY Times webpage this morning. Then a big block of Ukraine stories. Then, finally,

This Is Going to Hurt

Kat Johnston didn’t expect the pandemic to make her less stressed about her finances. After all, she temporarily lost her job at the library where she worked full time. But, like many Americans, she found an unexpected reprieve from money worries: Months at home limited her spending, and she received expanded unemployment insurance and two one-time checks from the government.

“When I first came back to work, I had probably $2,200 in savings — which I know is not much, but it’s more than I’d had in a while,” she said. But it was no match for the inflation that has come since. “That savings is pretty much gone now. As things have gotten so expensive, it’s been almost a paycheck-to-paycheck life.” (snip)

Millions of Americans are feeling similarly stuck as their savings run low and their cost of living runs high. Now, the economy appears poised to slow — potentially sharply — in ways that could limit wage growth and cause job losses even as prices remain elevated. But instead of rushing to the economy’s aid by giving Americans money, as they did in March 2020, policymakers are engineering this slowdown. Then, the problem was a global pandemic; now, it’s stubbornly high inflation, and the main way the government knows to solve that is by inflicting some economic pain.

In other words, the long-predicted “cliff” may finally have arrived.

Giving out tons and tons of money is part of the reason why inflation is worse in the US than in other 1st World nations. Money that really wasn’t necessary in 2021, and money that wasn’t tracked.

When the first round of pandemic aid programs began to expire in the summer of 2020, economists warned of a looming cliff facing both Americans who still needed government help and the pandemic-addled economy that was not yet ready to stand on its own. They repeated those warnings last fall, when Congress allowed unemployment benefits to expire for millions of workers, and again in January, when monthly payments for families with children came to an end.

The loss of those programs and others, including enhanced nutrition benefits, was painful for many families. But for the economy as a whole, the cliffs turned out to be more like potholes. Consumers kept on spending, in part because trillions in government aid had allowed many Americans to build up at least a small financial buffer — as Ms. Johnston did — and in part because a record-setting recovery in the job market gave workers an income boost that helped offset the loss in government aid.

Recovery is a good word: these aren’t new jobs, they’re jobs being re-filled after being cut. I know my business, and many others, have not filled the roughly 3rd that were created by people leaving.

Pay gains have been falling behind inflation for months. Credit card balances, which fell early in the pandemic, are rising toward a record high. Subprime borrowers — those with weak credit scores — are increasingly falling behind on payments on car loans in particular, credit bureau data show. Measures of hunger are rising, even with unemployment still low and the overall economy still strong.

And what has Biden been doing? Not much of anything, except trying to get his bills, like Build Back Better, passed, which would make inflation even worse. The Times spends a lot more time describing the pain Americans are feeling and are going to feel, and through the whole thing they mention Biden’s name just once, way, way deep

Republicans, meanwhile, have blamed the Biden administration — and in particular, the $1.9 trillion American Rescue Plan that Democrats passed early last year — for making inflation worse. Many economists, among them Democrats, agree that the spending did drive at least some of the inflation, making the politics of economic aid even more fraught.

And what’s Biden doing? Why, he’s going to the beach in Delaware late this morning. He’s not even waiting till the afternoon, planning on leaving at 11:55am.

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