Biden: We Didn’t Think the Economy Was this Bad

Joe Biden announced the “second stimulus” today.

In an interview on ABC news “This Week” he said the administration, “ ”misread how bad the economy was” and didn’t foresee unemployment levels nearing double digits.” While he went on to defend the stimulus plan, he did offer that the current unemployment rate was too high. So what’s he going to say when it ticks up another one or two percent?

The employment report Thursday pretty much sealed the deal. The more you look at it and think about it, the more dire it seems to become. Wage deflation fingerprints are all over the data and there’s little doubt that politicians at home over the holiday weekend are hearing the anecdotal evidence that you and I see every day. This is the sort of news that tends to put politicians into a panic mode. Unemployed people are not prone to reelecting their representatives.

Throw in a reaccelerating foreclosure trend, anemic bank lending and the likely implosion of the commercial real estate market in the next six months and you have an explosive mix. There may be an uptick in some numbers as depleted inventories are rebuilt, but with so much slack in the economy it’s likely unemployment could keep moving up even as output recovers at least for a little while.

The administration is getting painted into a corner. They cannot let the situation deteriorate further lest they open the door to a Depression scenario. Even if the economy stabilizes at this low level, it’s unacceptable politically so the only recourse is going to be to open the spigots wide. What this means for interest rates and the dollar is, of course, the wild card. Unintended consequences abound.

Welcome to Act ll of the Great Recession.

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About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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