It's the economic conundrum that dare not speak its name — and it's looking more likely than the Goldilocks "soft landing" that Washington and the mainstream media keep promising. It's called stagflation, and anyone old enough to remember the Carter administration remembers it all too well.
While the super-glossy official version of the jobs situation remains rosy-ish — and I'll come back to that in a moment — the hard numbers that make up the economy's foundation are cracking like Nancy Pelosi left out in the sun without any sunscreen. "The US manufacturing sector is imploding, and the economic contraction is accelerating," ZeroHedge reported on Tuesday.
Calling it "dismal," ZeroHedge noted that the U.S. Manufacturing PMI report just came in at 47.9. Anything under 50 shows that manufacturing is shrinking, while over 50 indicates growth. That figure is under the "prelim print of 48.0 and below the 48.1 estimate." That's the fifth straight month of contraction.
Fine, whatever — recessions follow expansions just as surely as night is followed by later that night. I screwed up the metaphor on purpose because the economic growth we've enjoyed under the Biden-Harris administration has been mostly illusory.
To give you an idea of how all-in the mainstream press is on presenting Rosy Scenario's picture, take a look at this USA Today report from Paul Davidson, just out on Tuesday. The headline asks, "Is job growth just slowing from post-pandemic highs? Or headed for a crash?"
Exclusively for Our VIPs: Florida Man Friday: The Absolute Fastest Way to Stop a Speeding Car
But guess what's missing from Davidson's analysis? Last week's yuge correction that BLS over the last year had invented 812,000 jobs that don't exist and, just as suddenly, winked them out of official existence. All of the job growth since Bidenomics took hold has been in government employment or in health care — which is virtually a government field now. Part-time work is way up and full-time employment has yet to recover to pre-lockdown levels.
Job growth is neither "just slowing" nor headed for a crash. It's imaginary.
But let's get back to that manufacturing data because I buried the lead. All that contraction has been accompanied by increasing producer prices. In a sane economy, decreased demand goes hand in hand with suppliers cutting prices. But that's not happening this time around.
Inflation is when the government prints money faster than productivity increases and is usually accompanied by economic growth. Stagflation is when you get rising prices in a stagnant or even shrinking economy. That's where we are, or at least appears to be where we're shortly headed.
I used to joke that Obamanomics was when you took an economy that was flat on its back (thanks to the 2007-08 meltdown), then stepped on its neck with a jackboot (overregulation) while hitting it repeatedly in the head with a big bag of money (the 2009 stimulus) while shouting, "WHY WON'T YOU GET UP?"
Indeed, Obama's "recovery" was the slowest on record since World War II.
Bidenomics is just like Obamanomics, except the boot is bigger and so is the bag of money. If we do end up with stagflation, it won't come as a surprise to readers here.
