Jan 7, 2023 4 min read

A classic question to ask at the start of the year is “Are you better off now than you were at the same time last year?”

So, let’s ask that question about our economy. Are we better off now than we were a year ago or two years ago? Are President Biden’s policies working?

Spoiler alert: The answer is a resounding no, but unless you vote in the Democratic primary, that is probably no surprise.

Equity markets are one broad measure of the economy. The S&P 500 closed down 18% for the year. The Dow Jones Industrial Index was down 13%. The Nasdaq, a broad measure of 3,000 stocks, was down an astonishing 27%. The S&P alone lost $7 trillion in market capital value.

The Biden administration is loudly proclaiming that “gas prices are down to $3.15” Not in Pittsburgh, but they fail to note that the price of gas was $2.15 when Biden took office. The correct statement should be that “prices are up 45%.”

Diesel prices are also “down” to around $4.53 but, again, the price was only $2.38 when Biden took office, so that works out to a 90% price increase.

Why are gas and oil prices up? Let’s see. On day one, Biden shut down the Keystone XL pipeline, and has been at war with the energy industry ever since. He said he intended to eliminate fossil fuels and replace them with green energy like wind and solar. How’s that working out this winter in Buffalo, N.Y., for example? Or in Pittsburgh, when it was minus 5 outside? Did you get the notice from your power company that we could expect rolling power outages because the grid could not generate enough power? Imagine what will happen when Biden takes more of the coal and oil fired plants off line?

It’s pretty hard not to notice that the price of everything is considerably higher, although the administration seems in denial about this. Food, clothing, housing and transportation are all up significantly. Consequently, the overall inflation rate is given as 7.1%, up from under 2% when Biden took office. Energy effects everything that is manufactured or grown. We need energy to make things, transport them and make the fertilizers to grow them.

While prices are going up, real wages have been going down for two years. Recent reports say that 63% of Americans are living paycheck to paycheck. The savings rate is at 2.3%, its lowest point in 17 years. Home sales are collapsing to recession levels.

A recent survey of economists at 23 large financial institutions predicted that the U.S. would move into a recession in 2023. Two-thirds of those economists expect the economy to contract in 2023. What does this look like to the average person? Consumer spending will go down, because people simply have less money to spend. People will deplete their savings and have less ability to absorb financial emergencies. Only 4-in-10 Americans have enough savings to absorb an unplanned expense of $1,000. To make matters worse, interest rates will continue to climb. There is a good chance inflation will continue to climb, forcing prices even higher. Prices are, in fact, rising at their fastest rate in 40 years.

As consumer spending declines and people buy less, producers will make less and unemployment will increase. Predictions are that unemployment may increase from its current 3.5% to 4.6% and stay at about that level through 2024. Other economists think unemployment may reach 5%. This means millions of Americans will lose their jobs.

The prevailing view of economists is that the worst is yet to come.

According to Rasmussen and Economist polls, 58% of Americans think the country is headed in the wrong direction. President Biden’s disapproval rating remains at 55%.

Americans are worse off economically today than they were last year and two years ago. President Biden’s policies are not working and will not work.

We are where we are economically due in large measure to the unrestrained binge spending of the last couple years. One simply cannot pump trillions upon trillions of dollars into the economy and not expect inflation. To expect the Federal Reserve to somehow magically make everything better by applying classic interest-rate fixes is unrealistic. What is required is a major adjustment in tax and spending programs and that can only be accomplished by a focused and conservative legislature.

We failed to elect that legislature either nationally or in Pennsylvania in the 2022 election. There seems diminishing hope of sane policy when our legislatures cannot even elect House speakers without engaging in a circus.

We appear to be in for tough sledding in the near term.

Dave Ball is chairman of the Washington County Republican Party.