The Biden administration’s euphoria over last week’s midterm election results risks lulling the White House into a false sense of complacency about the economic challenges ahead. That would be a mistake, as recent data reveals how millions of Americans are suffering from the president’s inflation tax.
On Tuesday, the Federal Reserve reported that household debt had increased during the third quarter at the fastest rate in 15 years, primarily because of higher credit card use and mortgage balances. The 8.3 percent leap from the previous year pushes the collective obligation of American borrowers to $16.5 trillion.
Meanwhile, the savings rate has fallen precipitously from its pandemic high of 30 percent to a paltry 3.1 percent in September.
Business shutdowns allowed many Americans — while stuck at home — to attack their debt and stock away savings. But that trend has reversed itself. In addition, real average weekly earnings — wages adjusted for inflation — have been underwater for 18 months, meaning workers are losing even more ground.
As Beege Welborne points out on hotair.com, all this offers evidence that U.S. households are increasingly stressed financially by rising prices, unable to save and turning to their high-interest credit cards. “There is no longer ‘excess’ at the end of the month available for average folks to tuck away,” Ms. Welborne points out. “There is always a certain percentage of Americans who live paycheck to paycheck, but under Biden’s inflation-driven economy, that number has risen to two-thirds of households.”
President Joe Biden was quick to laud the latest inflation report, which showed prices rising at 7.7 percent on a year-to-year basis, a bit slower than expected in October and down from 8.2 percent in September. But it will take many more months of such progress before the White House can take credit for taming a problem that it created in the first place and for many months denied even existed.
Voters gave Mr. Biden and Democrats a reprieve last week for their economic failures, but Republicans did manage to take control of the House, albeit by a slim margin. That alone should be enough to serve as a check against this administration’s belief that simply revving up the Treasury’s printing presses to address every policy issue represents a prudent approach to the nation’s fiscal affairs. But in addition to serving as a bulwark against White House excess, House Republicans should aggressively pursue a pro-growth economic and regulatory agenda to showcase that the party offers a clear fiscal alternative to soaring prices and endless red ink.