So far this year we have official forecasts of economic growth and inflation for the first three months or nine months of 2022. The results are very bad.
First, the economy did not grow. In the third quarter, real GDP was flat for the year. Second, the inflation rate has risen by more than 7%. Therefore, a linear economy, with a price increase of 7% +. These are numbers. They are factoids. That’s all there is. Now, there is some evidence that inflation is slowing in the most recent figures, probably around 5% using the base rate tracked by the Federal Reserve. But, then again, the Cleveland Fed has a median CPI that is still around 7%.
As I mentioned earlier, the leading indicators are down, M2 money supply growth has fallen from 30% to about 0%, and the market yield curve has of the Treasury between 3-month T-bills and 10-year bonds. Is it true? The short rate is higher than the long rate.
DEMOCRATS COULD ADD $500B IN NEW DEBT DURING THE LAST WEEK OF CONGRESS CONTROL.
The probability of a recession in 2023 is very high. Now, anything that could bring inflation down is a recession, but it’s a very blatant and painful way to do it.
Therefore, we have this lame-duck Congress, which, unfortunately, may start with weak-duck spending that, if implemented, will reverse the development of a small cost of living. According to the Wall Street Journal published today, federal spending has increased by about $5 trillion in the two years of Biden. This led to the pressure on the Federal Reserve to go printing money. The recent financial and financial restrictions may be completely broken. That is my concern.
In their latest excitement, liberal Democrats in the House are facing at least $150 billion in new spending for the so-called giant omnibus bill and could undermine the proper budget process and to stop the current small restrictions. It could be more, including a $1.6 trillion child credit extension that would give parents of children more than $100 billion a year without work requirements. That’s right. More unemployment welfare, which has become a powerful democratic battle cry.
Then there’s COVID money and Ukrainian aid and maybe some tax brokers. Overall, according to the WSJ editorial, non-defense spending will rise 10% over 7% last year and defense spending will rise nearly 10% compared to 6% last year. last year.
It is not limited. It will not stop inflation. It will not provide fiscal and regulatory incentives to reduce the burden of large planned governments. There is talk that the Republicans in the Senate will cooperate with this expenditure. Rumors are that GOP House leaders will strike a deal on the so-called omnibus spending bill. This is the root cause of the inflationary turmoil we have experienced in recent years.
Four people are going to get together in a room and come up with a deal that covers two thousand pages, maybe two trillion dollars in new spending and no one will know what’s really in that package until it’s voted on and printed. and even then, it will take. months, if not years, to find out what’s in there. There will never be any real control or proper monitoring of the abuses of small and selfish leaders and there is no interest in public interest and economic prosperity.
There is no budget resolution for next year. There are no committee meetings on the 12 spending bills. There are no expert witnesses disputing the merits of the policy or the level of spending. In other words, there is no standard order. And the Democrats, in cooperation with the Republicans, will try to do it in a lame session before the public wakes up to the financial damage and the possibility of an increase. higher costs of living, more sinking wages, higher utility and energy bills. and a deeper recession.
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This is no way to conduct economic policy. It’s a $6 trillion budget and growing and it’s about time someone – someone, most likely a Republican – put a stop to this fiscal madness and get back to budget-friendly policies. I mean, it’s just a big problem, and I want to warn you about it. Hats off to the editor of the Magazine, it’s something we’ve talked about a lot on this show and that’s my riff.
This article was adapted from Larry Kudlow’s opening remarks on December 1, 2022, edition of “Kudlow.”