Voters are Really Angry About the Biden Administration’s Stagflation
Last week the economic data caught up with the public mood. Annualized US GDP for Q1 was only up by +1.6%, far below the analysts 2.5% average consensus for growth. Combined with the personal consumption expenditure coming in hot at +3.7%, America is on the cusp of 1970s style stagflation.
The latest CNN poll has Trump up by six points, 49-43%, mostly due to Biden’s economic satisfaction at 34% and inflation satisfaction at 29%. Biden has been claiming strong growth of +5% and +3.8% unemployment rate, but these numbers regularly get downgraded, and most Americans are struggling. Everyone is aware that without Biden deficit spending running at 6.4% of GDP, the country would be in a serious recession.
The Federal Reserve Open Market Committee that sets interest rates will be meeting this week. Chairman Powell is talking about higher interest rates for longer, due to deficit spending driving up inflation. Powell worries employment tax collection will shrink in a recession. That means Biden’s -6.4% deficit may turn into an -11.4% deficit.
With the 10-year US Treasury bond hitting 4.7%, the 30-year mortgage rate for the average borrow is just below 8%. As a result, the monthly payment to buy the average house has more than doubled in the last year and a half.
The only positive news is that stagflation has been great for the price of gold, which has risen by over 50% in the last year to an all-time-highs above the $2300/oz level.
