If the media were pinning their hopes on the final surge of economic growth in 2022 to justify the reckless spending they’ve stumped for since January 2021, they’ll be disappointed.
After pumping the economy up with $4.7 trillion in spending and liquidity since President Joe Biden was inaugurated, the unofficial results are in: The economy is in a full-blown recession, with historic inflation as a topper.
Over the last several weeks, the Atlanta Fed’s GDPNow model estimate for real GDP growth has deteriorated to show negative growth for the second quarter after posting minus 1.6 percent growth for the first quarter 2022.
Pending some sort of a manual adjustment by government accountants, this will mark the second quarter in a row of negative growth in GDP.
Two quarters in a row of negative growth is officially a recession under the popular definition of the term.
This, just a year after much of the media, especially progressives, sold the country on the great benefits of the ill-named American Rescue Plan ($1.9 trillion), and the Biden Build Back Better Infrastructure Plan ($1.2 trillion).
It’s all the more stunning adding in the Federal Reserve balance sheet additions ($1.6 trillion) since the Biden inauguration, for a total of $4.7 trillion in new spending and liquidity to produce this recession.
It’s a big letdown for progressive media like Vox and BuzzFeed, which tried to tell the American people that the money spent would be a good investment, and anyway, what’s the harm in spending money?
In reality, it turned the prospect of +4 percent annual growth for the first six months of 2022, into a loss of over 1 percent annually, a swing of close to $900 billion in economic growth in a six-month period, judging by the GDP numbers.
As late as December 2022, Morgan Stanley was forecasting 4.6 percent economic growth for 2022.
But inflation, rising interest rates, a general malaise, progressive policies on energy and business that are hostile to job creation, and mismanagement of COVID policies have combined with reckless spending into a scene straight from “Dumb and Dumber.”
And now that missing GDP is an awful lot of missing rent payments, starving children, missed daycare and other happy things for which the media always stumps on behalf of the poor and middle class.
In dollar terms, it’s as if the whole state of Illinois, the fifth largest GDP producer, suddenly found every business closed down, including governments and every person in the state out of work.
Vox said that the infrastructure spending combined with COVID relief, if nothing else, “would show Americans, in the lead-up to the 2022 midterm elections, that the [Democratic] party is trying to help.”
“Democrats have to show that democracy — and the federal government — can work for everyday Americans. After a year of Covid-19 in which the federal response was anything but competent, and following decades more in which the role of government in everyday life has been shrunk and hidden (what experts call the “submerged state”), many have lost faith that the government can work for them. Biden hopes that by taking immediate action that can impact people’s lives, that can change.
Vox called the COVID stimulus passed under Biden, a long overdue government intervention in creating social democracy in America, “an economic crisis best solved by expanding government, and the popularity of this government expansion leading to its institutionalization.”
And Vox wasn’t the only publication that has had its hopes dashed by the futile promises of government intervention.
BuzzFeed wrote in glowing terms about every benefit that people got under the American Rescue Plan, while dismissing GOP objections with Democrat campaign quips:
“Thankfully, the misers are no longer in charge and help is on the way,” Rep. Debbie Wasserman Schultz (D) told BuzzFeed.
BuzzFeed hoped that some portions of the American Relief Act, such as expanded child care benefits, would be made permanent.
“The U.S. is certainly a long way from a European social democratic model, but the stimulus bill may prove to be a major step in that direction,” Vox reported.
Or perhaps it’ll just be another poignant reminder of how poorly socialist investment policy returns on investment.