(DCNF)—The U.S. economy is showing signs of stagflation as growth slumps down and prices continue to surge for average Americans, experts told the Daily Caller News Foundation.
U.S. annual economic growth measured just 1.6% in the first quarter of 2024, following a report of persistently high inflation in March of 3.5% year-over-year. The combination of both low growth and high inflation, in conjunction with continuously high amounts of government spending and debt, has led to signs of stagflation in the U.S. economy, which wreaked havoc on U.S. consumers throughout the 1970’s, according to experts who spoke to the DCNF.
“It’s not so much that we risk stagflation as we’re already there,” E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the DCNF. “We have basically pulled forward trillions of dollars of economic growth by borrowing from the future, but that must be repaid at some point. And it is highly inefficient as well.”
Stagflation is a unique economic phenomenon that involves slow growth, high unemployment, and elevated inflation and is particularly difficult to address as solutions for one issue can exacerbate the others, according to Investopedia. The most notable example of stagflation occurred in the 1970’s, after an oil crisis.
The U.S. national debt climbed above $34 trillion for the first time at the start of 2024 and currently sits at nearly $34.6 trillion, according to the Treasury Department. The national debt has increased by around $6.8 billion since President Joe Biden first took office in January 2021.
“Stagflation is the inevitable result of Bidenomics,” Michael Faulkender, chief economist at the America First Policy Institute, told the DCNF. “When you massively increase spending, whether green subsidies or student loan forgiveness, while simultaneously reducing the ability of the economy to produce because of all the regulatory restrictions being imposed, you get reductions in growth with higher prices. If Bidenomics continues, then we should expect stagflation to continue.”
Biden has made high-spending policies part of his broader agenda, signing the $1.9 trillion American Rescue Plan in March 2021 and the $1.2 trillion Bipartisan Infrastructure Law in November 2021. The president also signed the Inflation Reduction Act in August 2022, which authorized $750 billion in new spending, with $370 billion of that dedicated to green initiatives to combat climate change.
The Biden administration’s latest plan to forgive student loans would cost an estimated $559 billion over the next ten years through various loan cancellations and interest suspensions. The president had one of his previous, more costly plans to forgive student loans struck down by the Supreme Court in June 2023.
Jai Kedia, a research fellow in the Center for Monetary and Financial Alternatives at the Cato Institute, cautioned the DCNF about assuming the U.S. was suffering from stagflation, noting that the phenomenon is usually accompanied by major supply shocks.
QT continues but there's a long way to go before we return to normalcy, and that likely won't happen w/ Powell & Co. chomping at the bit to cut rates and taper the balance sheet runoff – securities are only down 18.6% from their peak and total assets down just 17.4%: pic.twitter.com/PV48bGZozW
— E.J. Antoni, Ph.D. (@RealEJAntoni) April 25, 2024
“The news on both fronts — inflation and output — is far from ideal, but there is no reason to think that we will get stagflation from just this one report,” Kedia told the DCNF. “When stagflation last occurred in the 1970s and early 1980s, the U.S. economy had significantly different characteristics. That era was marked by severe wage inflation and strong wage contracting at unsustainably high levels, driven primarily by labor union bargaining. Businesses passed those labor costs on to consumers, and since those wage increases weren’t the result of any productivity gains, the result was inflation with little economic growth. That unique situation is (hopefully) unlikely to occur again.”
Despite recent low growth figures, gross domestic product surged in the third and fourth quarters of 2023 to 3.4% and 4.9%, respectively. Economic growth projections in those quarters included huge gains from government spending.
“Today’s report shows the American economy remains strong, with continued steady and stable growth,” the White House said in a statement following Thursday’s GDP report. “The economy has grown more since I took office than at this point in any presidential term in the last 25 years — including 3% growth over the last year — while unemployment has stayed below 4% for more than two years. But we have more work to do. Costs are too high for working families, and I am fighting to lower them.”
Top-line job growth has remained high as well, with the U.S. most recently adding a total of 303,000 nonfarm payroll positions in March with an unemployment rate of 3.9% after adding 275,000 in February. Despite persistent growth, gains have been dominated by part-time jobs and employment from the government.
“In general, high inflation and low output occur as a result of severe supply shocks,” Kedia told the DCNF. “The Fed does not have much control over such shocks, and it’s usually best to avoid making drastic monetary policy decisions on the basis of such shocks. It’s too early to tell if such a shock has occurred over the past month, so it is unclear whether output has gone down due to supply constraints, or whether the increased borrowing costs have finally cut down on people’s consumption, or whether this was a noisy data observation.”
In an effort to reduce the rate of inflation, the Federal Reserve has already raised its federal funds rate to a range of 5.25% and 5.50%, the highest in 23 years, with the last hike being in July 2023. At the Federal Open Market Committee’s (FOMC) most recent meeting in March, the majority of Fed governors kept their estimate from December that there would be three rate cuts by the end of 2024.
“There is absolutely no reason for the Fed to cut rates this year besides the obvious political motivation,” Antoni told the DCNF. “Recall that during the first three years of the Trump presidency, the Fed was raising rates and selling off the balance sheet, also called ‘quantitative tightening.’ The reasoning for tighter monetary policy was fast labor market growth and inflation fears. Today, those indicators look even worse according to the Fed’s own thinking: job growth has been much faster according to official government metrics, and inflation remains far in excess of the 2.0% target, with inflation expectations completely unanchored. They should be talking about raising rates, not cutting them.”
A majority of investors now predict that there won’t be a rate cut until the FOMC’s September meeting as inflation remains persistent, according to CME Group’s FedWatch Tool.
Business leaders are cautious about the current state of the economy, with JPMorgan Chase CEO Jamie Dimon saying on Friday that he is hopeful that the U.S. can bring down inflation and maintain growth, but he is worried about the possibility of stagflation, according to The Associated Press.
“Sadly, the indicators point to stagflation for quite some time because the excessive government spending that caused this problem isn’t letting up,” Antoni told the DCNF.
The White House deferred the DCNF to previous statements.
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Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
