New data and survey results show that the inflation caused by Joe Biden’s policies is having a severe impact on the economy, and it’s ruining Americans’ Christmas season for millions of families.
The National Retail Federation conducted a survey asking families how much they plan to spend for the 2022 holiday season. According to their findings, the average family intends to spend $832 on “core holiday items.” That includes presents, decorations, and dinners. That’s a decrease of 5% compared to the $879 that was spent on average in 2021.
Interestingly, the National Retail Federation says that despite the drop in direct holiday spending, it anticipates that there will be a 6% to 8% rise in overall household expenses through the end of December, indicating that Americans are spending less on the holidays and more on basic household costs.
A November survey of 1,000 consumers by RetailMeNot came to a similar conclusion. It found that “roughly half of shoppers say they’ll be buying fewer things this year.”
Additionally, in November, CNBC reported, “Roughly 25% of consumers said they would opt for cheaper versions or more practical gifts, such as gas cards, according to TransUnion’s holiday shopping survey.”
The reason families are spending less on Christmas this year is not because they have suddenly become less generous, but rather because other expenses have increased dramatically, largely due to recent inflation.
Inflation is the general increase in prices of goods and services within an economy. It’s often caused by an increase in the amount of money in circulation, or by a decrease in the supply of goods and services. When inflation exceeds economic growth, it can lead to higher prices and decreased purchasing power, effectively making people poorer.
President Biden’s policies have led to a rapid increase in inflation. Since coming into office, Biden has consistently pushed for massive new spending and stimulus programs without fully offsetting the new spending with increased taxes, injecting trillions of new dollars into the US economy, which had already experienced large amounts of money-printing during the COVID-19 pandemic and its associated lockdowns.
Biden and congressional Democrats have implemented a $1.2 trillion infrastructure plan, extended subsidies for Obamacare as part of the American Rescue Plan, increased the number of people on Medicaid by almost 10 million, froze all federal student loan payments, and expanded student debt cancellation programs. Biden and congressional Democrats have also increased unemployment benefits and distributed $1,400 stimulus checks to almost every American household, including millions of people who never lost their jobs, as well as increased the child tax credit.
All of these costly policies have increased government spending and deficits. In fiscal year 2021, the national budget deficit was $1.48 trillion, and in 2022, the deficit topped $1.38 trillion. These two huge deficits followed the massive 2020 deficit of $4.22 trillion, which occurred under the watch of President Trump and a Democrat-controlled Congress.
The three-year deficit from 2020 through 2022 is the largest ever recorded and has directly led to unprecedented inflation. Since December 2020, the inflation rate has gone up more than 14%, according to the consumer price index. That’s the largest increase in four decades.
Wages have also risen, but not enough to compensate for the inflation. Data from the Federal Reserve Bank of St. Louis reveals that wages have been lower than the rate of inflation in seven of the last nine quarters.
The increased cost of goods and services is causing people to be more frugal with their holiday spending. Many are choosing to buy fewer presents or reduced-price gifts. This is especially true for lower-income families, who are already struggling to make ends meet.
Even worse, it’s unclear how long the present inflation crisis will last, as many of Joe Biden’s policies are still in their early stages. Without additional tax revenue, increasingly more dollars will continue to be pumped into the economy by the Federal Reserve to cover government spending.
This puts the Biden administration and the Federal Reserve in an exceptionally difficult situation. If congressional Democrats and Biden continue to raise taxes in an attempt to reduce the budget deficit — something that seems unlikely now that Republicans are on the verge of retaking control of the House of Representatives — they run the risk of further dragging down the economy at a time when economic growth has been sluggish or even negative.
If the Federal Reserve continues to increase interest rates, it will negatively impact lending and impede economic expansion.
The only good long-term solution is to return government spending to reasonable levels, balance or nearly balance the budget, and reform welfare programs so that only those truly in need are receiving benefits — policies that used to be widely embraced by both Democrats and Republicans alike. Over time, these policies coupled with economic expansion would allow America to grow its way out of its large debts and inflation.
Unfortunately, there have yet to be signs that President Biden is planning to reverse his reckless policy agenda. That means the damage caused by inflation is likely here to stay, for this Christmas and perhaps for many more in the future.