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Larry Kudlow: Biden inherited a V-shaped resurgence from Trump and turned it into a crisis
Larry Kudlow: We are experiencing a price, wage spiral
FOX Business host Larry Kudlow weighs in on how the Biden admin is responding to record-high inflation on ‘Kudlow.’
As we've said many times on this show: Americans are smarter than Joe Biden thinks they are. No matter how many displays of cognitive dissonance from Mr. Biden or falsehoods or — to use a word I don't like to apply to presidents, but must in this case — outright lies, Americans see right through it.
You simply cannot tell the public that there is no inflation when prices for food, groceries, electricity, natural gas and cars are rising sharply. Even with the recent drop in gasoline prices, they're still up 26% over the past year. As a result, working folks have been forced to take a 3.4% pay cut during that period.
That's why I don't blame the railroad union workers for demanding higher wages. They're just trying to catch up to higher prices. They don't control the government spending and monetary spigots. They are victims of very bad policies.
Mr. Biden's zero-inflation "celebration" on the White House lawn is a slap in the face of these people. When he says he "inherited" an economic crisis and turned it into a "resurgence," it's just factually wrong. Folks know this. Factually, he inherited a V-shaped resurgence from President Trump and turned it into a crisis. No amount of James Taylor songs are going to change that.
The economy was growing at roughly 6.5% in the first quarter of 2021, with about 1.5% inflation. So far this year, the economy has contracted into negative territory and more may be coming. The Atlanta Fed's GDP tracker has been marked down for the third quarter from 2.6% to just 0.5%.
The CPI is rising 8.3% ahead of a year ago, and of course people feel this in their bones and their budgets. The Cleveland Fed's median CPI, which is a very useful measure of core inflation, is now up to 6.7% after rising month after month and, as the economy sinks into recession, we are experiencing a price-wage spiral that is embedded into the economy. Milton Friedman called this "inflationary recession." Nowadays we call it "stagflation" and Biden Democrats are now at war with the Federal Reserve.
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