- “Bidenflation” stands at 16.7%, exposing a significant increase in prices since President Biden took office
- Real wages have declined under Biden’s watch, forcing people to cut back on various expenditures
- The American economy is likely to experience a protracted period of stagflation, characterized by economic stagnation accompanied by high inflation
- “Bidenomics” is a failure, and Biden’s misdirected energy policy is the root cause of these issues
More than six out of every ten (61%) Americans live paycheck to paycheck.
American credit card debt has surged by 38%, increasing from $743.5 billion in the first quarter of 2021 to a recent total of $1.031 trillion.
You may wonder why.
Look nowhere else than Bidenomics.
Americans are grappling with soaring prices. These days, it takes $1,000 in earnings to buy what $857 could purchase when Biden took office. And the earnings have not kept up with inflation.
How do Americans address the shortfall?
Take on two jobs, reduce expenses, skip meals, use credit cards, or dip into retirement savings. There’s evidence that all these strategies are employed in Biden’s America.
The dark shadow of Bidenomics is 16.7% inflation under Biden’s watch. His policies are a complete and utter failure that has led to stagflation in the United States. No amount of sugarcoating can hide the truth.
The Consumer Price Index (CPI) released by the government on Wednesday showed a 3.7% year-over-year increase in prices from August 2022 to August 2023.
The CPI rate had declined steadily from a 40-year high of 9.1% in June 2022 to 3.0% in June 2023 for 12 consecutive months. In July, it broke that run and increased to 3.2%, and further increased for the second month in August to 3.7%.
The CPI rose 0.6% between July 2023 and August 2023 after adjusting for seasonality and slightly less at 0.4% on an unadjusted basis. In the same period, Food rose by 0.2%, Energy by 5.6%, and All items except food and energy (Core) by 0.3%.
President Biden’s statement opened on a positive note:
Today’s report provides more evidence that core inflation is trending down toward pre-pandemic levels at a time when employment remains strong.
That was only partially correct for three reasons:
- Core inflation rate increased by 0.3% between July 2023 and August 2023. The increase was bigger than 0.2% between June and July this year.
- The August core increase of 0.3% is higher than the 3-month average of 0.23%, indicating an acceleration.
- Even though the year-over-year core dropped from 4.7% to 4.3%, it was due to the base effect, as seen in the chart below. Realistically, there is no significant change in conditions for President Biden to take solace in.
President Biden’s statement acknowledged recent gasoline price increases:
Overall inflation has also fallen substantially over the last year, but I know last month’s increase in gas prices put a strain on family budgets. That’s why I remain laser-focused on cutting energy costs, including by investing in clean energy to bolster our energy security.
President Biden’s energy policies are inflicting great pain on Americans. He deliberately pursued policies pushing the U.S. from energy independence to dependence. Our energy dependence enriches Russia’s war chest. Meanwhile, we depleted our strategic petroleum reserve (SPR) to gain an advantage in the midterms, potentially compromising our national security.
The Biden economy continues to be the worst-performing going back to President Carter. Since February 2021, the first full month of President Biden’s term, the prices of various commodities, including food, gasoline, used cars, and air tickets, have consistently increased. Although the rate of increase has slowed, prices are still rising monthly.
As we have noted numerous times, President Biden’s reckless spending has resulted in inflation levels not seen in 40 years. The U.S. economy will experience an extended period of stagflation characterized by stagnation accompanied by inflation.
TIPP CPI
We developed the TIPP CPI, a metric that uses February 2021, the month after President Biden’s inauguration, as its base. All TIPP CPI measures are anchored to the base month of February 2021, making it exclusive to the economy under President Biden’s watch.
We use the relevant data from the Bureau of Labor Statistics (BLS) to calculate the TIPP CPI, but we adjust the period to Biden’s tenure. CPIs are like index numbers that show how prices affect people’s lives, similar to how the Dow Jones Industrial Average reflects the stock market.
When discussing the TIPP CPI and the BLS CPI, we convert the index numbers into percentage changes to better understand and compare them.
Bidenflation, measured by the TIPP CPI using the same underlying data, reached 16.7% in August. It was 16.2% in July,16.0% in June, and 15.9% in May.
By the middle of 2022, significant inflation had already taken hold. In August 2022, CPI inflation stood at 8.3 percent. While the official BLS CPI year-over-year increases will compare prices to already inflated bases in the coming months, these statistics might mask the full impact.
TIPP CPI vs. BLS CPI
The following four charts present details about the new metric.
The annual CPI increase reported by BLS is 3.7% for August 2023. Compare this to the TIPP CPI of 16.7%, a 13.1-point difference. Prices have increased by 16.7% since President Biden took office. On an annualized basis, TIPP CPI is 6.5%.
Food prices increased by 19.4% under Biden compared to only 4.3% as per BLS CPI, a difference of 15.2 points.
TIPP CPI data show that Energy prices increased by 38.0%. But, according to the BLS CPI, energy prices declined by 3.6%. The difference between the two is a whopping 41.6 points.
The Core CPI is the price increase for all items, excluding food and energy. The Core TIPP CPI was 14.6% compared to 4.3% BLS CPI in the year-over-year measure, a 10.2-point difference.
Further, Gasoline prices have increased by 52.0% since President Biden took office, whereas the BLS CPI shows that gasoline price has improved by 3.3%, a difference of 55.3 points.
TIPP CPI finds that Used car prices have risen by 32.3% during President Biden’s term. The BLS CPI shows that the prices have dropped by 6.6%, a difference of 39.0 points.
Inflation for air tickets under President Biden is 24.8% compared to the BLS CPI’s finding of an improvement of 13.3%, a difference of 38.1 points.
Americans’ Concerns
The latest Investor’s Business Daily/TIPP Poll, completed earlier this month, shows nine in ten (88%) survey respondents are concerned about inflation. Throughout the past year, inflation concerns have stayed above 85%. The “very concerned” share has been over 50% for nineteen months.
Over half (54%) say their wages have not kept up with inflation. Only 20% say their income has kept pace with inflation.
This statistic hovered in the low twenties for most of the last year. The positive change between January and March has petered out since May. Notice the steady descent from March 2023. However, in September, it posted 20% after the low of 16% in August.
Nominal wages represent the amount of money one earns without considering changes in the cost of living. On the other hand, real wages consider inflation and measure the wages’ purchasing power. Real wages provide a more accurate reflection of what is affordable with the income earned by factoring in the changes in the cost of living.
Real weekly wages measured year-over-year dropped for 26 of the 31 months of the Biden presidency. On a positive note, it broke a 26-month negative run in June.
As a result of inflation, Americans are cutting back on household spending.
They are cutting back on entertainment (81%), eating out (80%), purchasing big-ticket items (80%), holiday/vacation travel (78%), and memberships/subscriptions (74%).
Many (66%) are cutting back on even good causes such as charity giving. Over one in two (59%) households spend less on groceries. The high gasoline prices forced 58% to cut back on local driving.
Inflation Direction
The chart below compares the 12-month average of monthly changes against the 6-month and the 3-month averages. We also show the reading for August 2023.
The 12-month average considers 12 data points and presents a long-term reference, while the six-month and three-month averages consider recent data points.
Typically, we compare the three-month average to the data from August 2023 to get a clearer picture. In August 2023, the price increase for ‘All items’ was 0.60%. However, the three-month average was lower at 0.33%. This means that the current reading is higher than the average of the past three months, indicating an acceleration in price increases.
The twelve-month long-term average of 0.31% is higher than the six-month average of 0.27%, which shows an improvement in the recent six months. Meanwhile, the three-month average of 0.33% is higher than the six-month average of 0.27%.
In conclusion, this pattern suggests that while price increases have slowed down in the long term, there was a noticeable pickup in August.
In August, the price increase for Food was 0.20%, higher than the 3-month average of 0.17%. This indicates that food prices have increased. Further, when we compare the three-month average of 0.17% to the average of the past six months, which was 0.12%, we can see that the recent 3-month period had a slightly higher price increase.
The twelve-month average was 0.34%, much higher than the six-month (0.12%) and three-month (0.17%) averages. The data confirms the improvement relative to the past long-term 12-month average. However, the recent increase is worrisome.
The Energy situation sharply deteriorated last month, with a spike of 5.6%. This increase in August 2023 is worse than the three-month moving average of 2.10%, indicating deterioration.
“All items less food and energy” is called “core inflation,” i.e., after removing volatile food and energy components. The core inflation reading in August was 0.30%, higher than the three-month average of 0.23%. This indicates that there was deterioration in August.
Meanwhile, the three-month average of 0.23% is lower than the six-month average of 0.32%, suggesting a slowdown in core inflation. Additionally, the six-month average of 0.32% is lower than the 12-month average of 0.37%.
In summary, inflation worsened all around.
Inverted Yield Curve
In normal circumstances, longer-term investments offer higher yields than shorter-term investments due to the higher risk associated with longer durations. However, an inverted yield curve can occur during periods of economic turbulence, such as the current times. This happens because investors expect higher yields in the short term to compensate for the potential short-term uncertainties in the economy. As a result, the yields on shorter-term bonds become higher than those on longer-term bonds of the same credit quality.
The presence of an inverted yield curve is an indication that investors anticipate economic instability or a possible economic downturn. The inverted yield curve is a leading indicator of lower inflation and recession. It has a strong track record of accurately predicting the last ten recessions since 1955, with only one incorrect signal in the mid-1960s.
The closing yields on Wednesday were:
- 5.396% for the 1-month Treasury bill
- 5.485% for the 3-month Treasury bill
- 5.534% for the 6-month Treasury bill
- 5.415% for the 1-year Treasury bill
- 4.990% for the 2-year Treasury note
- 4.662% for the 3-year Treasury note
- 4.259% for the 10-year Treasury note
- 4.344% for the 30-year Treasury bond
Stagflation
Most Americans struggle, challenged by the high core inflation rate of 4.3%. Stagflation refers to a combination of stagnant economic growth and high inflation.
Since March 2022, the Fed has raised interest rates by 5.25 percentage points. High interest rates are likely to slow down the economy further.
Each time the Federal Reserve increases interest rates to contain inflation, the U.S. government must pay higher interest rates to service its ballooning debt. A rising debt-to-GDP ratio limits the ability to fund essential government services.
In a recent Reuters survey of 97 economists, more than 95% (94 of 97) predicted the Fed would hold the federal funds rate in the current 5.25%-5.50% range next week. However, 20% predicted another increase in 2023.
The September IBD/TIPP Poll revealed that most Americans view the economy negatively. Nearly half (49%) believe we are in a recession, and six in ten (59%) feel that the economy is not improving.
Considering these factors and the numbers, we predict that the U.S. economy will face an extended period of stagflation characterized by a slowdown and inflation.
To access the TIPP CPI readings each month, you can visit tippinsights.com. We’ll publish the TIPP CPI and our analysis in the days following the Bureau of Labor Statistics (BLS) report. The upcoming release of TIPP CPI is on October 13, 2023. We’ll also post a spreadsheet in our store for download.
Hey, want to dig deeper? Download data from our store for a small fee!
Want to understand better? We recently wrote an explainer that sixth graders could understand. Everyone can benefit from it. Milton Friedman’s Priceless Lessons On Inflation.
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TIPP Takes
Geopolitics And Geoeconomics
1. Crimean Shipyard On Fire After Ukrainian Attack – A.P.
The attack in the port city of Sevastopol, which serves as the main base for Russia’s Black Sea Fleet, came as Moscow launched drones against Ukraine’s southern Odesa region.
The assault on the Sevastopol shipyard appeared to be one of the biggest attacks in recent weeks. Moscow’s Defense Ministry said Ukraine fired ten cruise missiles at the shipyard and three sea drones at Russian vessels in the Black Sea.
2. Russia Rushes New Military Elements To Deploy In Ukraine Ahead Of Schedule: UK – Al Arabiya
Russia rushed military elements from its new 25th Combined Arms Army (25 CAA) to Ukraine ahead of schedule, a UK intelligence update revealed.
Washington-based think tank Institute of Study of War (ISW) wrote in an assessment in July that Ukrainian officials expected the newly formed Russian formations to not be combat-ready until at least 2024.
3. Rogue Russian Pilot Tried To Shoot Down RAF Aircraft In 2022 – BBC
Russia had claimed the incident last September was caused by a “technical malfunction.”
The RAF plane – with a crew of up to 30 – was flying a surveillance mission over the Black Sea in international airspace when two missiles were fired, the first of which missed rather than malfunctioned as claimed.
Intercepted communications show that one of the Russian pilots thought he had been permitted to target the British aircraft following an ambiguous command from a Russian ground station.
4. Beijing Demands Clarification After Ukrainian Official Questions Intellectual Potential – WION
China and India “don’t analyze the consequences of the steps they take,” said Mikhail Podoliak, the top aide to Zelensky. He also said that the two Asian powerhouses have “low intellectual potential.”
A spokeswoman for the Chinese foreign ministry said that the aide must clarify his remarks.
5. China Misses ‘Common Prosperity’ Goal As Income Gap Now Widest – Nikkei Asia
China’s income gap has grown to the widest ever since records began, as the average household income of the top 20% in urban areas reaches 6.3 times the lowest 20%.
Those in the service industries, including restaurants, hotels, and entertainment, have lost their jobs or had their salaries cut during President Xi Jinping’s “zero COVID” policy over the last three years. Their salaries have not yet caught up since the policy was lifted in January.
6. China Denies Reports Of Ban On iPhones – D.W.
In response to recent media reports, the Chinese Foreign Ministry said it had not banned iPhones and other foreign mobile devices in government and state companies.
However, the ministry did say it had noted media exposure of security incidents related to the Apple smartphones.
“China has not issued laws, regulations or policy documents that prohibit the purchase and use of foreign brand phones such as Apple’s,” Foreign Ministry spokesperson Mao Ning said.
7. Taiwan Claps Back At Elon Musk After China Comments – Al Jazeera
At a business summit in Los Angeles, Musk said Beijing’s policy was to “reunite” Taiwan with mainland China.
Taiwanese Foreign Minister Joseph Wu said that Taiwan was “not for sale” after Musk referred to Beijing’s official position that the self-ruled island is part of its territory.
In October, Musk drew a rebuke from Taiwan after he suggested Taiwan-China tensions could be resolved by giving Beijing some control of the island.
8. China Appoints Ambassador To Taliban-Ruled Afghanistan – D.W.
China is the first country to appoint an envoy to Afghanistan since the Taliban took over in 2021. The new ambassador was greeted with fanfare by the Taliban, who hope to receive international recognition.
China did not specify whether the ambassador’s appointment was a step toward formally recognizing the Taliban government. While Beijing has not formally recognized the Taliban, China, and Afghanistan signed an oil extraction agreement earlier this year.
9. Al-Qaeda Magazine Released On 9/11 Anniversary Threatens Future Attack On U.S.- Memri.Org
The Al-Sahab Media Foundation, the official outlet of Al-Qaeda’s Central Command, released the latest issue of its Arabic-language periodic magazine on September 10, 2023.
The issue is “dedicated to the 22nd anniversary of the #September_attacks,” perpetrated by Al-Qaeda against the U.S. on September 11, 2001.
The editorial, titled “9/11 Should Not Be Repeated!” declares that 9/11 caused irreversible damage to the U.S. and threatens that Al-Qaeda will perpetrate a more devastating future attack.
10. U.S. Approves $5 Billion Sale Of F-35 Jets To South Korea – WION
The announcement came in the backdrop of North Korean leader Kim Jong Un visiting Russian President Vladimir Putin for a rare summit.
“It [the sale] will improve the Republic of Korea’s capability to meet current and future threats by providing credible defense capability to deter aggression in the region and ensure interoperability with U.S. forces,” the State Department said.
11. North Korea Reaches “Satisfactory Agreement” With Russia At Summit – Kyodo News
The North Korean leader invited Putin to visit his country at a convenient time. Putin accepted the invitation with pleasure, the official Korean Central News Agency (KCNA) said.
The New York Times reported that Pyongyang wants Russia to provide it with advanced satellite and nuclear-powered submarine technology, citing U.S. and allied officials.
12. U.S. Military Resumes Drone, Crewed Aircraft Operations In Post-Coup Niger – Al Jazeera
Since the July coup that removed President Mohamed Bazoum, the approximately 1,100 U.S. soldiers deployed in West Africa have been confined to their military bases.
General James Hecker said that negotiations with the military rulers of Niger resulted in some intelligence and surveillance missions resuming.
13. U.S. Diverting Military Aid From Egypt To Lebanon: Official – Al Arabiya
The U.S. is diverting $30 million in allocated military aid for Egypt to Lebanon.
The move comes after the Biden administration informed Congress that it was redirecting $85 million in military funds for Egypt due to human rights violations. Lebanon has received billions of dollars from the U.S. in humanitarian, education, and military aid since 2006.
14. Egypt Brands Ethiopia’s Move To Fill Nile Mega-Dam As ‘Illegal’ – RFI
The announcement came just a fortnight after Ethiopia, Egypt, and Sudan resumed negotiations.
Ethiopia announced on Sunday it had filled its Grand Renaissance Dam on the river Nile, which has been the source of a long-running dispute with downstream Egypt and Sudan.
The Grand Ethiopian Renaissance Dam (GERD) is set to double Ethiopia’s electricity generation and could become Africa’s biggest dam.
15. Nearly 200 Environmental Activists Murdered Worldwide In 2022: NGO Report – RFI
In its annual review, the Global Witness NGO named 177 land and environmental defenders killed in 2022 – from the Amazon to the Philippines and the Democratic Republic of Congo.
Latin America again bore the brunt of murders worldwide, including 39 killings across the vast Amazon rainforest, a vital carbon sink facing destruction when the world grapples to curb climate change.
16. Do Aliens Exist? NASA To Publish Long-Awaited UFO Report Today – AFP
On Thursday, NASA is set to release the findings of a long-awaited study on unexplained flying objects in Earth’s skies.
The U.S. space agency announced last year it was reviewing evidence regarding unidentified strange phenomena, or UAPs – which has replaced the term “UFO” in official parlance.
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Republished with permission from TIPP Insights
