In Economics 101 college courses, students usually are warned against wantonly printing money, creating inflation, and propping up unemployment checks as ways to stifle economic growth and prosperity. Yet none of these basic free-market principles have resonated within the Biden White House as it pushes for a government-driven, top-down economic approach to revitalize the U.S. economy.
The third round of economic stimulus checks under the Biden White House led to rising inflation because Americans now had additional money to spend on things and it was a sudden influx of cash into the local and national economy. The housing bubble continues to price out locals while inflating prices that the wealthy (or over-leveraged) could afford in places such as Boise, Idaho, Phoenix, Arizona, or Salt Lake City, Utah.
For example, in Boise, home sale prices rose by 71.9% over the past four years. Many of the new residents and home buyers are wealthier people moving from California or Washington and are pricing out local residents.
Even Biden’s Department of Labor said that in July, consumer prices had the highest one-month increase since 2008 by jumping 5.4%. Food prices have also jumped to the tune of 0.8% from May to June and meat and poultry prices rose by 2.5%, straining people’s budgets because their dollar does not go as far as it normally would and purchases fewer goods and services for more money.
In other words, your purchase power is weakening during rising inflation.
The Biden administration claimed that it we are in a “transitory” inflationary period in the economy, but some sources admitted that it could be an extended period of inflation. However, Biden continues to push for more government spending and infusion of cash into the economy through trillion-dollar infrastructure bills despite his previous policies creating the currently-rising inflation problems in the economy.
Another action by the Biden administration was to add enhanced federal funding to state unemployment checks to the tune of $300 a week through September 2021. In many instances, the extra federal funds in unemployment checks encouraged workers to stay home and not work because they made more money as unemployed people than by working in retail jobs.
As a result, small businesses and many employers throughout the U.S. are struggling to hire workers or entice unemployed workers to return to work. “Hiring” or “Now Hiring” signs dot many cities and towns and businesses have resorted to announcing wage increases and benefits packages to entice people to return to work.
The last job reports by the Department of Labor demonstrated this wide disparity between available jobs and the number of unemployed. In July, the department noted that there were 9.8 million job openings and 8.7 million unemployed. The Department of Labor claimed that these jobs were not being filled as workers were being picky about which jobs to apply for or take.
While the Biden administration claimed that the job creation numbers were great, small business owners strongly disagreed. A July survey of small business owners by the National Federation of Independent Businesses (NFIB) found that hiring has been very difficult for businesses. “Small business owners reported a record high reading of unfilled job openings with 49% of owners reporting job openings they could not fill in July,” the survey summarized, “Unfilled job openings have remained far above the 48-year historical average of 22%.” It added that owners “struggled to find qualified workers for their open positions, which has impaired business activity in the busy summer months” while raising compensation “to the highest levels in 48 years to attract needed employees.”
To combat the gap between job openings and worker scarcity, states with conservative governors ended the Biden-enhanced unemployment checks to encourage workers to return to the workforce such as Florida, Arizona, Texas, and Indiana. Although Indiana’s decision was stopped by a state court decision, other states have proceeded with this return-to-work approach. States run by liberal governors have continued with the enhanced unemployment checks through September 2021 and led some supporters to call for extending the program.
By all accounts, it appears that the Biden administration needs a crash course in Economics 101 to tamper down inflation and stabilize the economy.