CLAIM: Vulnerable Democrat Rep. Tom Malinowski (NJ), during a recent town hall, was caught on camera saying the “economy is incredibly strong” and that it is “booming.” He also noted that “it is doing far better than anybody thought.”
VERDICT: Mostly False.
The economy is not doing “incredibly strong,” as the congressman says it is. In February, it was reported that consumer prices are up 7.5 percent, jumping the most in nearly four decades as the new year started. As a result, inflation is zapping the savings accounts of American family’s basic needs and added pressure on the Federal Reserve to hike the interest rates in March. Breitbart News’s John Carney wrote:
Although many economists and anti-Trump journalists claimed President Donald Trump’s tariffs would raise prices, consumer prices remained low throughout his administration. Trump’s tariffs turned out not to be taxes on consumers. Instead, they were absorbed by Chinese producers and exporters and the profit margins of most large U.S. companies.
Inflation only began to accelerate last March after years of coming in below the Fed’s two percent target. The Fed had decided to keep interest rates low although the economy was recovering at a faster than expected rate. What’s more, the Biden administration pushed through billions of dollars of deficit spending in the American Rescue Plan. These combined to fuel demand for goods and services faster than supplies could expand, pushing up prices.
Federal Reserve chief Jerome Powell, following the advice of many of the economists on the central bank’s staff, initially claimed that inflation was due to transitory factors. Fed officials forecast that inflation would fall in the latter half of 2021, predicting that supply chains would swiftly unsnarl and a rebalancing of consumer demand from goods to services would relieve pricing pressure. The Biden administration, under the tutelage of former Fed chair and now Treasury Secretary Janet Yellen, largely followed suit and continued to press for even more spending.
Additionally, data from the Commerce Department recently showed that the price of “big-ticket consumer goods” such as durable goods, made to last three or more years, rose over the past twelve months by 11.6 percent, which is the most significant annual increase since 1975. Furthermore, Nondurable goods prices rose by 7.2 percent, and Services prices rose by 4.6 percent.
“The inflation in the price of durable goods has been even more jarring to consumers because it follows a quarter of a century in which prices consistently fell year after year,” Carney also wrote.
In fact, the congressman supported the Democrats’ $1.2 trillion, 2,702-page so-called bipartisan infrastructure bill last year, which Biden signed into law and has been fueling inflation. He also supported the $1.75 trillion Build Back Better Act (BBB), which studies found would have caused more harm to the economy. It stalled in the Senate after Sen. Joe Manchin (D-WV) said he could not vote for it.
The Wall Street Journal recently published a piece acknowledging that the rise in prices and the supply chains crisis caused by the Democrats will also impact their behemoth spending bill since the costs of services are rising. The Biden-backed bill may not be able to afford the cost of roads, bridges, railways, fiber optic lines that were supposed to be fully funded from the bill:
Elevated costs for materials and labor are already pushing contractors to charge more for construction projects, government data show, increases that economists and industry officials say could reduce the number of infrastructure projects the new federal money can finance. State and local officials facing higher prices may give priority to easier, less ambitious projects, and some worry that a rush of government spending could exacerbate inflation in the industry.
The cost of construction projects for government rose 13% in January compared with a year earlier, according to supplier price information released by the Labor Department last week. The producer-price index also showed input prices for construction of highways and streets was up 20% from a year earlier, with steel mill products and plastic construction products up 113% and 35%, respectively, over a year. The price of gasoline and diesel fuel are each up more than 50%. Those cost increases well outpace consumer inflation, which advanced 7.5% in the past year, the fastest rate in four decades.
Some in the industry hope technological advancements, as well as new employment opportunities generated by the federal infrastructure spending, could mitigate the labor shortage. But Ken Simonson, the chief economist for the Associated General Contractors of America, said greater flexibility and rising wages at other jobs may limit the draw of new workers into the construction jobs, where workers need to be on site.
“Tom Malinowski must be living in an alternate universe,” said Congressional Leadership Fund Press Secretary Cally Perkins. “If Malinowski thinks the economy is ‘booming,’ then clearly he’s so out of touch with the working class that he has no business representing them in Congress.”
There are some parts of the economy that have shown resilience despite inflation. Consumer spending was stronger than expected in January. Unemployment is very low, although still above the level of the prepandemic Trump era. The travel and leisure sectors are reviving. The economy grew 5.7 percent last year and is expected to grow another four percent this year.
Jacob Bliss is a reporter for Breitbart News. You can follow him on Twitter.