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EDITORIAL: Government is a problem with economy

on Monday, 13 June 2022. Posted in Local News

EDITORIAL: Government is  a problem  with economy

    Some financial experts are predicting gasoline in the United States could average $6 a gallon by August. No wonder Americans aren’t optimistic.

     Look at the basics of what is happening. Gasoline goes up in price, meaning consumers have to spend more and more at the pump. In the end, that will affect what is spent on other projects, which in turn will affect businesses such as the Walmarts and Targets, which are reporting declines in revenue based on dips in sales. With business prospects dipping, the stocks of such companies have fallen along with the market as a whole, largely out of fears of rising interest rates and an impending recession. When the stock market falls, millions of Americans invested via 401(k)s and savings/retirement instruments see their investments plunging.

    With inflation already at the highest levels since the 1970s, another problem is supply. A shortage will continue to escalate prices – and the country is now facing the reality of diesel fuel in short supply. Not only will that affect producers such as farmers, it will mean more difficulty in getting products to market.

     Toward quantifying assessments of what is happening in the economy, the eighth annual First Citizens Bank Small Business Forecast had some good news. Two-thirds (67%) of owners described their business as being successful in the past year, an 8% year-over-year increase. But among small business owners, concerns are real going forward. Only 42% of those surveyed reported feeling confident in the economic conditions for the next 12 months, which is a 19% decrease compared to 2021. Similarly, the long-term outlook on economic conditions for the next two to three years has also significantly decreased to 49%, down from 63% in 2021.

The factors driving general economic uncertainty include:

• Inflation (51%)

• Global conflict (34%)

• Unpredictable market conditions (33%)

• Ongoing pandemic concerns (30%)

          While the Biden administration blames inflation on so many factors other than its policies on energy and government spending, Americans are not buying it. A Morning Consult/Politico poll found 62% of registered voters believe President Joe Biden’s policies are at least somewhat responsible for inflation, compared to just 11% who believe the president isn’t responsible at all.

        Biden from the outset of his presidency declared war on the oil and gas industry, and even today is doing little to inspire investment in the energy sources that are needed to keep the economy running. Then massive federal spending programs on coronavirus relief and infrastructure had/and are having impact. More money chasing fewer goods is a recipe for inflation.

        Sadly, it seems Washington won’t learn. Democrats are promoting a $1.75 trillion social spending proposal as a solution for inflation. Analysts say the spending would not contribute to inflation, since it would be spread out over 10 years and is paired with tax increases.

        Based on the present public assessment of the economic situation in the United States, convincing people that more government spending to “help” consumers will be a solution is a tough sell. It looks like we won’t get a real reading on direction until the midterm elections in November.

        Reprinted with permission from The Rock Hill Herald and the S.C. Press Association.

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