I didn’t intend to write a political article this week, but here I am. The good news is that it really shouldn’t be too political.
The reality is that the President doesn’t have too much to do with the economy. It’s extremely complex and relies on a number of things that a President doesn’t control. Neither Biden nor Trump can change mortgage rates or make companies charge less for cars.
The biggest issue that people have with the economy is inflation. I’ve been explaining that inflation blame was misdirected for at least two years. The big hiccup was COVID and the recovery along with the Russia-Ukraine war to keep gas prices high. (Every country had incredible inflation, and the United States actually did much better than most of them.)
While on the topic of gas prices, let’s get into…
The Price of Oil
In the above article that I linked, there were a couple of comments that the high oil prices were Biden’s fault because he’s promoting green alternatives. The theory was that oil companies weren’t investing, and there wasn’t enough supply. Most people would probably be shocked to learn that, under Biden, the United States is extracting more oil than it ever has.
Imagine an NBA player setting a record for scoring points. Instead of any kind of recognition, the news says, “Bah, he should have scored more.”
In addition to the record oil, we’ve got record numbers of green alternative sources of energy. Recently, OPEC said they were going to cut the amount of oil they produce. That diminishing supply almost always pushes the price up. Instead, oil dropped under $70 a barrel.
It’s rare that you can please everyone, but it seems that everyone should be very happy. If you are a fan of low prices, you should be happy. If you are a fan of drilling for more oil, you should be happy. If you are a fan of alternative energy, you should be happy.
The Price of Housing
The price of housing is a mess. By almost any measure, shelter has never been more expensive. The only people who escape are those who bought when interest rates were low. If you rent, the prices have skyrocketed. If you bought recently, you likely paid a lot for the house, and the interest rate on your mortgage is way up there.
Unfortunately, I don’t know how much can be done about housing. The pandemic stopped building, and the supply chain made building expensive. It’s going to take time for that to work through the system. It’s not something that a President can do too much about.
I have a friend who travels a lot. When she sees the rest of the world’s progress, she realizes that the US isn’t keeping up. I don’t travel the world as much as she does, so I take her word for it.
Assuming she’s correct, one main reason why other countries may be ahead of the US is that we (the US) haven’t invested in infrastructure for a long time. Usually, Democrats want to spend money, and the Republicans want to shut it down to keep taxes and the government small. I believe that quality infrastructure is a great investment.
As the Brookings Institute states:
“Between the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA), the 117th Congress invested $1.25 trillion across the transportation, energy, water resources, and broadband sectors for the next five to 10 years.”
I’m a fan of spending in all those infrastructure areas. Efficient transportation helps everyone. Who is against getting clean water to everyone? Even people who hate Big Tech like the idea of broadband improvements to watch Netflix. (Obviously, broadband also helps with business and education.)
It will take time, perhaps a decade, to spend all the money and make the infrastructure improvements a reality. Rome wasn’t built in a day… and rebuilding the US will take many days.
Your 401k and IRA Retirement Plans
The stock market is doing well this year, but it is mostly catching up from last year. The S&P 500 is almost at its highs from December of 2021. As this USA Today article states, “Stocks and your 401(k) may surge now that Fed rate hikes seem to be over, history shows.”
Raise your hand if you want your retirement accounts to be in the dumps. If any of you have your hands raised, shoot me an email and I’ll take some of that money off your hands.
I’m living up to my name and ending this before covering everything. I had planned on writing more about the medicine prices, such as insulin, but I want to get this published before the weekend.
It’s not a perfect financial situation. Obviously, housing prices are still high, along with inflation. However, it seems like most things are moving in the right direction. The things that Biden has directly done, such as infrastructure and drug prices, should help out a lot of people.
I’m not sure what else people would want from the President. According to the polling, many disagree with me. Hopefully, a few of those will share their views in the comments.