(TheRedAlertNews.com) – Bidenomics’ alleged success, so eagerly touted by Democrats, is emerging as a giant perversion wreaking terrible havoc on the nation’s well-being since the present paltry economic growth is fueled by Americans rapidly “burning through” their badly needed savings, according to economists.
Under President Joe Biden’s leadership, the U.S. economy has been partially driven by Americans spending their savings on everyday items, experts told The Daily Caller.
Thus, the US GDP growth stood at 2.1% for the second quarter of 2023. This happened despite the Federal Reserve’s efforts to slow growth by increasing its federal funds rate.
Notably, consumer spending, a significant component of the GDP, has been rising. However, experts highlighted that this growth has been at the cost of the average American’s savings.
“Consumption is about 70 percent of GDP growth, so naturally any additional consumption by households and businesses is going to add to GDP. But to the extent that consumption is fueled by one time windfalls from the government, it’s basically bringing future consumption into the present. Eventually, the lack of real income to justify the higher consumption will catch up with the households and businesses,” explained Ryan Ellis, president of the Center for a Free Economy.
Data from the Federal Reserve Bank of St. Louis shows that the Personal Consumption Expenditure, which gauges Americans’ spending on goods and services, has been slightly higher than usual, hovering around 68% since the second quarter of 2022. Historically, this number has been closer to 67%.
“In this case, it’s the excess savings. Those are still being worked down. People are drawing down those savings to counter inflation, increasing their core goods and services faster than income growth,” Ellis added.
Recent figures show a decline in personal savings, dropping to $794.1 billion in August from over $1 trillion in May.
The Caller stresses that this decrease is stark compared to the nearly $6 trillion saved in April 2020 during the onset of the COVID-19 pandemic.
“In the last three months for which we have data, the growth in consumer spending has outpaced income growth. Consumers have been using savings and going into debt to fuel their spending. That’s providing a temporary boost to GDP but the decline in savings is also throttling investment, the key driver of long-run economic growth,” commented E.J. Antoni from the Heritage Foundation.
“Savings have been trending down for nearly the entire tenure of the Biden administration because that’s precisely the period in which we’ve had inflation above the pre-pandemic trend,” the analyst emphasized.