President Joe Biden recently gave a speech claiming that America has made economic progress since he took office, saying, in part, that his economic policies are succeeding because America has seen “over 11 million jobs created, the two strongest years of job growth in history, 750,000 manufacturing jobs created, the lowest unemployment rate in 50 years, the best two years for small business applications on record, with annual inflation falling and wages rising over the last six months.”
He went on to call the Fair Tax Act “fiscally demented” and claimed that his economic policies aim to build America’s economy “from the bottom up and the middle out”, along with attacking Republicans for their attempts to reign in spending, saying that they were threatening to let the US default on its debt.
Watch that speech here:
But, while Biden pats himself on the back for the performance of the economy, economic storm clouds are building. Specifically, bankruptcies are building to levels not seen since the Great Financial Crisis/Great Recession that began in 2008. ZeroHedge, reporting on that, noted:
“The US has transitioned from more than a decade of quantitative easing to more recent quantitative tightening. QT will remain until the Federal Reserve is finished squashing inflation. However, such a massive paradigm shift in markets might result in a period of deleveraging among highly levered firms that were able to flourish during the QE era.
“New Bloomberg data shows large companies (at least $50 million of liabilities) filing for bankruptcy topped 20 this month, the highest in any other January dating back to 2010. Back then, 25 filings were seen as the economy was still reeling from the aftermath of the GFC.”
Yet worse, that problem shows no signs of abating, with Damian Schaible, the co-chair of the restructuring group at law firm Davis Polk & Wardwell, telling Bloomberg “I think we’re going to see continued increased filings in 2023.”
Continuing, he added “From a broader market perspective, it’s pretty simple: We have a market filled with companies with historically high leverage — thanks to the easy money policies of the past decade — and a not-insignificant portion of that debt is floating rate.”
RightWireReport, adding more details on what might be going on as the bankruptcy issue builds, noted that “The reality is that business is struggling because the consumer is increasingly tapped out. In December 2022, the personal saving rate in the United States amounted to 3.4 percent, down from 7.5 percent in December 2021. The personal saving rate is calculated as the ratio of personal savings to disposable personal income.”
Biden can pat himself on the back all he wants and claim the economy is doing great. But, as he does so, the storm clouds are building over the economy, with rising rates, rising bankruptcies, and consumer financial exhaustion meaning that economic hardship is likely in store for America heading into the new year.
By: Will Tanner. Follow me on Twitter @Will_Tanner_1
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