The American economy in the age of Joe Biden, the most senile president ever 'elected,' continues to suffer collapse, as recessionary clouds are now gathering on the horizon faster than expected.
According to reports late last week, the nation's gross domestic product (GDP) -- the measurement of all economic activity combined -- unexpectedly and shockingly shrank during the first quarter (January-March) while at the same time U.S. exports fell and retailer and wholesaler inventories fell.
In explaining the situation, Zero Hedged noted what was behind the unexpected contraction of the U.S. economy was mostly two things: "A sharp drop in change in private inventory and a huge swing in net exports."
The site adds:
According to the [Bureau of Economic Analysis], the first quarter decrease in real GDP reflected decreases in inventory investment, exports, federal government spending, and state and local government spending, while imports, which are a subtraction in the calculation of GDP, increased. Consumer spending, business investment, and housing investment increased.
The site noted the following Q1 economic indicators:
- Personal consumption rose 1.83%, up from 1.76% in Q4
- Fixed Investments 1.27%, also up solidly from 0.50% in Q4
- However, the change in private inventories was a huge hit to GDP (just as we warned last month it would be) subtracting -0.84% from GDP, vs adding 5.32% in Q4
- Net trade was also ugly, with exports collapsing to -0.68% vs an increase of 2.24% in Q4. At the same time, imports were largely flat at -2.53%, vs -2.46% last quarter, resulting in a net trade print of -3.21% in Q1, vs a -0.22% decline in Q4.
- Government consumption was unchanged at -0.48% vs -0.46% a quarter ago.
So the economy shrank from 6.9 percent GDP in the fourth quarter of 2021 (as the country came roaring back to life following the pandemic) shrinking -1.43 in the current quarter.
Meanwhile, prices for everything have skyrocketed thanks to a combination of ongoing supply chain issues, massive infusions of cash into the economy thanks to Democratic Congress-driven multi-trillion-dollar spending bills, and the Biden regime's attack on fossil fuels after the country became largely energy independent (and at full employment) under then-President Donald Trump.
The resulting "Bidenflation" has been catastrophic for American households, acting as a massive hidden tax on everything. Inflation has driven up the price of cars, homes, food and energy, and now, decreasing inventories are only going to add to inflationary pressures as consumers will have to continue paying more for goods that are increasingly in short supply. And oh, by the way, getting those goods to consumers is costing more as well; fuel price increases are already being passed on to consumers by companies that refuse to fully absorb the added expense.
"So what is really going on here? Well, in our view the US economy is already in a stagflationary recession, and the sooner the Biden admin admits this the better, which is precisely why it just did so. Why now? Because it hopes that after a brief recession in Q1 and Q2 - which it [can] blame on Omicron and Putin, in fact just call it GDPutin -- the hope is to present voters a Q3 GDP print, due just days before the midterm elections, that is solidly in the green for a Hail Mary bounce for Democrats," Zero Hedge noted.
"We doubt it will work, but we are far more worried about just how serious the recession the US finds itself in is," the site noted further.
Add into this mix the disastrous Federal Reserve policy of raising interest rates to slow down the purchases of major items including cars and homes because that is literally the only inflation-fighting arrow the central bank has left in its quiver.
Translated: The Fed will kill economic growth to save us from inflation at a time when the economy is already hammering Americans. That will lead to falling home prices, for certain, and perhaps another 2007-like real estate bubble burst. The recession is coming.
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