- The Biden administration is touting the unexpectedly good Growth Domestic Product numbers for the second quarter of 2023, showing the economy grew 2.4% year-over-year.
- Some experts are less optimistic, showing concern over economic indicators like rising government debt, consumer durables and nonresidential fixed investment.
- “We would need double-digit growth to outpace the rise in the debt and deficit, given other factors like upward marching interest rates,” E.J. Antoni, research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the Daily Caller News Foundation.
The Biden administration has taken credit for the unexpectedly good economic growth data from the Bureau of Economic Analysis (BEA) for the second quarter of 2023, but some experts still see signs of poor economic conditions hidden in the numbers.
U.S. Gross Domestic Product (GDP), which serves as a measure of economic growth, reached 2.4% in the second quarter of 2023, outdoing expectations, with the Biden administration touting it as a win for his economic policy, “Bidenomics.” Despite the seemingly positive number, some experts believe the growth is far from enough, with certain economic indicators like rising government debt, consumer durables and nonresidential fixed investment raising concerns for the future.
“The 2nd quarter 2023 US GDP of 2.4 percent was unexpectedly strong, but it’s not nearly as indicative of sustainable economic growth as it seems on the surface,” Peter Earle, economist at the American Institute for Economic Research, told the Daily Caller News Foundation.
Earle points to consumer durables, typically more expensive items that have a longer lifespan, and nonresidential fixed investment, typically investment used by businesses for long-term growth through equipment that will yield increased future output, as causes for concern.
“In the first quarter of 2023, spending on consumer durables was up 16.3 percent; in the second quarter, 0.4 percent. Americans have less to spend, having worked almost completely through pandemic savings at this point. And with the student loan moratorium ending in October, more consumption will be sucked out of the economy.”
Inflation fell in June but remains high, with the Consumer Price Index (CPI) increasing 3.0% annually compared to 4.0% in May. Core CPI, which excludes energy and food, was farther from the target, rising 4.8% year-over-year in June, coming down from 5.3% in May.
“Today’s numbers show that our economy grew at a 2.4% annual rate last quarter while inflation fell significantly,” Biden tweeted following the announcement from the BEA. “We also learned private business investment was strong and investment in manufacturing contributed more to growth than it has in 40 years. Bidenomics at work.”
The president went to Maine on Friday, touting the positive growth and low inflation in prepared remarks about “Bidenomics.”
“The jump in nonresidential fixed investment (7.7 percent) has to do with government programs like the CHIPS and Science Act and infrastructure spending, not with demand-driven growth,” Earle told the DCNF. “A question which comes to my mind is: does the Biden administration’s redistributive industrial policies put the Fed’s disinflationary efforts at risk? They may.”
The Federal Reserve announced its 11th hike for interest rates since March 2022, putting the target rate in the range of 5.25% and 5.50% following the most recent Federal Open Market Committee meeting. The series of rate hikes are part of the ongoing effort to bring inflation down to the Fed’s 2% target.
“We would need double-digit growth to outpace the rise in the debt and deficit, given other factors like upward marching interest rates,” E.J. Antoni, research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the DCNF.
“While the bulk of the debt is not attributable to Biden, several trillion dollars are,” Antoni told the DCNF. “However, the spike in interest rates has been a direct result of the inflationary fire which he fanned by his administration’s spending, borrowing, and printing of money. Those higher rates have increased the cost of refinancing the entire debt, not simply the trillions acquired from his time in office.”
Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact firstname.lastname@example.org