Reality Strikes Again
After media gaslighting about Joe Biden’s “winning streak,” an inflation report and stock market reaction inevitably snaps us back into reality.
This week’s inflation report for August shouldn’t have surprised anyone who has purchased groceries or any array of services over the past year.
Regardless, the stock market reacted to the bad news the way it always does, with one of the largest drops in recent history - over 1,200 points.
While gasoline and durable goods prices have dropped, it wasn’t enough to deal with huge increases in just about everything else, from health insurance — up over 24 percent year to year - to groceries.
Some may try to poo-poo the stock market reaction, but given the massive growth in individual retirement accounts and other savings instruments tied to equities, anyone with an IRA probably doesn’t want to look the number of dollars that went poof today. According to USAFacts.com, 53 percent of Americans own stocks in some form - more than one third of households save through Individual Retirement Accounts.
This is going to make the Federal Reserve Board’s work to tame inflation much harder, and probably guarantees a deeper recession than the one we’re probably in right now (we’ve already met the textbook definition of one, two consecutive quarters of “negative GDP growth” (Gross Domestic Product, or the value of all goods and services). Just remember what Fed Chair Jerome Powell said in Jackson Hole, Wyoming, recently:
“Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance… reducing inflation is likely to cause a sustained period of below-trend growth.”
As for the political impact, I hate to say “I told you so,” but I warned you previously to ignore the “hectic flush” Democrats and their allies in the media were experiencing over their supposed legislative and electoral “wins” over the past month. That’s about to change, and in a big way. While a great deal of media polling will continue to be weaponized to depress GOP support and turnout, as it was in Wisconsin in 2020, pay attention to the handful that matter, including TIPP, Rasmussen Reports, and Trafalger. There are others. Mostly, watch for the trends. The Real Clear Politics “average” is useful, but a lagging indicator.
How are those 87,000 new IRS agents from the “Inflation Reduction Act” looking right now? Thank goodness graduate school students and graduates are getting much of their student loans transferred. . . to you. That’s some “lucky streak.”