Joe Biden was quick to recognize the Bureau of Economic Analysis numbers which showed that the U.S. had experienced a 2.9% increase in the fourth quarter of 2022 and 2.1% overall.
Biden tweeted: “Last quarter, our economy grew at 2.9% per year – solid growth, even as we bring down inflation. ” “Our economic strategy worked. It still works”.
Heritage Foundation says that the Heritage Foundation’s most recent report should sound alarm bells and not trumpets.
EJ Antoni, a research fellow, says that economic growth is slowing. Inventory growth was just 0.7 percent, which is the key driver for future economic development.
Antoni stated that residential investment fell off a cliff because consumers couldn’t afford to buy high-end homes, pay high-interest rates, and have falling incomes.
Net exports experienced a slight increase but this was mostly due to a slowdown in international trade. “This is reflected in an increased GDP. ”
Antoni is most concerned about the rapid decline of real disposable income. It has surpassed $1 trillion by 2022.
He noted that this was the second-largest percentage drop in real disposable income after 1932, which was the worst of the Great Depression. To keep up with inflation, consumers are cutting back on savings and using the stimulus checks that they received in 2020-2021. Last fiscal year, savings fell by $1.6 trillion below 2009 levels.
Consumer spending growth will slow down as consumers deplete their cash reserves and borrow more. Antoni stated that this accounts roughly for two-thirds of GDP. This is bad news for the economy.
Biden is again counting his chicks. What he wants us to believe is good news may actually be a warning sign for things to come.