Tuesday, June 20, 2023

BIDENOMICS - WILL JOE DESTROY THE ECONOMY AS FAST AS HE DESTROYED THE BORDER? - if Joe Biden's economy is as great as he says it is, why have 401(k)s plunged 20%?

 

Video: Stephen Moore Slams the ‘Bidenomics Calamity’

Leading conservative economist speaks to a crowd of Freedom Center supporters about the worst President ever.

Speaking to a David Horowitz Freedom Center crowd on Wednesday, June 14, 2023 at the Four Seasons in Beverly Hills, conservative economist Stephen Moore took aim at the “abysmal” Joe Biden and the economic havoc he’s caused.

Don’t miss this must-watch video below:

Stephen Moore from DHFC on Vimeo.

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BIDENOMICS:

if Joe Biden's economy is as great as he says it is, why have 401(k)s plunged 20%?

Joe Biden and his minions have been unwavering in their claims to have been the great engineers of a stunning economic recovery.

Here's the dotard's yawping:

Look, here's where we are. We have the fastest growing economy in the world, the world, the world. We have 8.6 million new jobs just since I got in an office. Unemployment rates down to 3.6%. We've reduced the deficit last year by $320 billion, this year going to reduce it by $1.7 trillion dollars, trillion dollars.

But according to Fox Business:

The average balance in employer-sponsored retirement contribution plans plunged more than 20% last year, according to new data from Vanguard Group.

Vanguard, which tracks about 5 million retirement accounts, found the average account balance for 401(k)s and 403(b)s was $112,572 in 2022 – down nearly $30,000 from the previous year. 

"Vanguard participants’ average account balances decreased by 20% since year-end 2021, driven primarily by the decrease in equity and bond markets over the year," the report said. 

I calculated a 26% drop based on the estimated $30,000 amount, but even if Vanguard is closer to correct, that's still a double-digit drop in the span of just a year, an astonishing amount.

It's obviously commeasurate with the stock and bond market drops, as the report noted.

It's also the result of battered consumers making early withdrawals for "hardship" from their savings. That could be sudden medical bills, suddenly surging credit card rates, or credit card debt piling up as inflation eats into paychecks.

About 2.8% of workers participating in employer-sponsored 401(k) plans made a so-called "hardship" withdrawal in 2022, according to the report. That marks a major increase from the 2% rate recorded before the pandemic began and is also up from the 2.1% reading in 2021.

Another reason is that worker wages fell 2.3% in 2022, according to this Bloomberg report last month:

US weekly wages fell in 2022, according to new Bureau of Labor Statistics figures, revealing widespread softness that wasn’t previously evident in other data.

Average weekly wages were $1,385 in the fourth quarter of last year, a rare 2.3% decline from the same period in 2021, the latest results from the Quarterly Census of Employment and Wages, published Wednesday, showed. The 2022 drop followed a 5.9% increase the year before.

But nobody's bills went down, let alone their credit card interest rates. As wages dropped, those things went up. Inflation squeezed workers from two ends. So the next thing to go was the 401(k) where worker contributions went down, and worker withdrawals went up:

According to Fortune magazine last February:

The average 401(k) participant’s contribution rate dropped from 6.6% of their income in 2021 to 6.4% in December 2022, according to Bank of America’s 401(k) Participant Pulse report released Wednesday. It's a sign that Americans are more concerned about short-term financial needs right now, according to the bank’s analysis.

Which is sad stuff, and indicative of workers having personal finance fires to put out now, with no faith in the future. Some 40% of workers are now delaying retirement, mostly to age 68, in order to have enough money to retire on, not just from inflation but to help struggling family members, based on all of these retirement-savings eaters going on, according to a January MarketWatch report .

Meanwhile, bankruptcies are up 20% for consumers and 213% for corporations, and debt restructuring companies are enjoying a bumper harvest in new business.

Here's other nasty stuff from that Fox26 report published last month:

Credit card delinquencies are climbing, especially for people ages 18 to 39, at 8.3% from 5.1% a year ago, according to the New York Fed.

And Cox Automotive reports borrowers more than 2 months late on auto loan payments was 26.7% higher in December than a year earlier.

Here's the cherry on the cake: Inflation is indeed getting under control, with the CPI clocking in at 4% on the last reading, down from from the 9.1% seen a year earlier, which still is twice what it was when President Trump was in office, but quite a bit better than what we have seen from Bidenflation. That has caused the Fed to pause on the rate hikes which are driving up the mortgage and credit card rates, but it has signaled it still may hike a couple more times this year.

Problem: It still won't help anyone.

According to Fox Business:

Despite the pause, Americans are unlikely to see any relief according to Greg McBride, CFA, chief financial analyst with Bankrate.com.

"A pause won’t bring borrowing rates lower, particularly for variable rate debt such as credit cards and home equity lines of credit that have increased in step with the Fed’s 10 previous interest rate hikes," McBride said. "Elevated inflation and a strong labor market mean the Fed is nowhere close to cutting interest rates, so borrowers will continue to be dealing with high interest rates for months to come, even if the Fed doesn’t hike rates further."

Well, lucky us.

Let's just say that these things don't happen in a healthy, growing, economy, such as we saw in President Trump's.

Worker 401(k) falls in savings are hugely demoralizing to their savers, and are said in some studies to affect voting choices, particularly for older voters more than any other factor, and voters know which parties and politicians are better for their 401(k)s just from experience.

While this ugly picture is, well, ugly, it does have potential to affect voting choices as surely as gasoline prices. One hopes that some kind of relief can come soon, but in the meantime, we can all see why so many voters are tuning out Joe Biden's ridiculously insulting claims of having fostered some kind of economic booms. To paraphrase the memorable Lloyd Bentsen, We know economic booms, Joe, we remember economic booms well, and you're no economic boom.

Image: Pixabay / Pixabay License


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