U.S. Economy Headed in Wrong Direction

The disappointing July Jobs Report revealed that unemployment rose to 4.3.%

House Ways and Means Committee Chair Jason Smith (R-MO) outlined how the situation is even worse than the numbers indicate.

Since the start of the Biden-Harris Administration in January 2021, 1.8 million more Americans have had to take multiple jobs. In July, another 33,000 Americans took on second or third jobs. Over the last year, 508,000 full-time jobs have been replaced with 548,000 part-time jobs.

Of the relatively few full time jobs that were actually created, (particularly considering that the nation’s economy was coming out of Covid) many were government positions which draw from, rather than add to, the national economy. Since the Biden-Harris Administration began, 30 percent of new jobs have come from hiring for government salaries. In July, government agencies added 17,000 to taxpayer-funded payrolls.

Chairman Smith examined the type of jobs that ar essential to the U.S. middle class, and found depressing results. In the last year, American manufacturers have added only 14,000 total jobs. In July, manufacturers added just 1,000 jobs following an 8,000 cut in June.

The Jobs Report was just one analysis of an economy in distress. The Ways and Means committee chair added the following indicators:

Families Falling Behind on Bills: Over one-third of families (37 percent) paid a late fee in the past year.

Everything Costs More: Prices have increased 20.1 percent since the beginning of the Biden-Harris Administration.

Americans Making Less: Real wages and benefits have fallen 3.6 percent since the beginning of the Biden-Harris Administration.

Inflation Above Fed’s Target: For 39 straight months, inflation has been above the Federal Reserve’s 2 percent target.

Inflation Higher Than Wages: Inflation outpaced wages for 26 straight months under the Biden-Harris Administration.

Historic Interest Rates: Under the Biden-Harris Administration, interest rates hit their highest levels in 23 years.

Nearly Doubled Mortgage Costs: The monthly mortgage payment for a median priced new home has increased by $1,027 and is 91 percent higher than when President Biden and Vice President Harris took office in January 2021.

$1 Trillion+ Credit Card Debt: Credit card interest rates are at the highest level in more than three decades, while consumer credit debt has exceeded $1 trillion for the second calendar quarter and the number of Americans struggling to pay credit card bills has increased to the highest level in 12 years.

Shrinking Savings: Thanks to higher prices, families have spent the entirety of their pandemic savings by 2024, and they are able to save less of their income. At 3.4 percent, the personal savings rate is near its historic lows.

Families Falling Behind on Bills: Over one-third of families (37 percent) paid a late fee in the past year.

An Investopedia analysis also provided a worrisome outlook. “Three separate reports delivered downbeat surprises. Construction spending fell in June for the second month in a row, dropping 0.3%, the Census Bureau said. Forecasters had expected a 0.2% increase instead, according to a survey of economists by Dow Jones Newswires and the Wall Street Journal.”

In terms of the overall American economy, The Congressional Budget Office has published worrisome data. the federal budget deficit in fiscal year 2024 is $1.9 trillion. Adjusted to exclude the effects of shifts in the timing of certain payments, the deficit amounts to $2.0 trillion in 2024 and grows to $2.8 trillion by 2034. With such adjustments, deficits equal 7.0 percent of gross domestic product (GDP) in 2024 and 6.5 percent of GDP in 2025. … By 2034, the adjusted deficit equals 6.9 percent of GDP—significantly more than the 3.7 percent that deficits have averaged over the past 50 year.

Illustration: Pixabay

Quick Analysis

Ukraine’s Frozen Conflict

As we approach winter in the northern hemisphere, the war in Ukraine is beginning to resemble a “frozen conflict” from many perspectives. Ukrainian President Volodymyr Zelensky recently told the media he hopes the war will end faster once President-elect Trump takes over in January. Opinions in Moscow, however, differ from that of the Ukrainian leader. Russian President Vladimir Putin argues that the North Atlantic Treaty Organization (NATO) needs to exclude Ukraine from joining in “exchange” for peace. If it does not, he says, then no end to the war is in sight. So far there is no Christmas solution. Several NATO countries, according to Vladimir Socor of the Jamestown Foundation, are tentatively considering “coalitions-of-the-willing” to provide security for Ukraine outside of the formal NATO framework. There is, however, no collective mechanism today under which such an arrangement is viable. According to the NATO Charter, while Ukraine is a NATO partner country, it may not join as a full member since it has not fulfilled the requirements for membership. That has not stopped NATO and allies from continuing “to provide Ukraine with unprecedented levels of support, helping to uphold its fundamental right to self-defence,” according to the organization. Socor says that keeping Ukraine out of NATO will not advance peace with Russia. Waiting for a peace settlement, he suggests, would only serve to encourage Moscow to continue the war indefinitely. Although the Biden Administration officially withdrew its support for Ukrainian membership in 2021, NATO maintains an “open door” policy toward membership-seeking countries. The current White House position led the way for European states to oppose Ukraine’s membership saying that a decision should be delayed until “conditions are met.” Biden pushed for changing “open door” to a “bridge” metaphor. It is not intended as an across-the-board NATO policy and has been implemented in the past on a case-by-case basis, says Socor. “The alliance’s open-door policy was not fully insulated from Russia’s non-statutory blocking power, and NATO-aspirant countries’ path toward membership was not always irreversible.” Russia has successfully blocked states like Georgia from joining, first in 2008 and again after the war in Ukraine began in 2014. Russia recognizes the value add of Ukraine to NATO is enormous and that Kyiv has a better case than some other nations. Putin’s invasion was, in part, intended to foreclose that option. By 2021, Moscow was pushing hard to maximize its war objectives, which included further annexations of Ukrainian territory. A main goal for Putin was, and is, to ensure there is no Ukraine left to join NATO. As President-elect Trump prepares to assume office in January, he is faced with the historical challenges presented by the war. Post-conflict security guarantees were the center of several proposals made during the 2023 military stalemate. The incoming Trump Administration has yet to outline how it intends to handle the Russia-Ukraine war. Analysts in Washington believe that the new Administration will expect its European allies to guarantee the majority of Ukraine’s security needs. As we approach 2025, several European nations have acknowledged that they do not view Ukraine as eligible for NATO membership as it would draw the organization into the middle of the conflict. Others want to wait until the war is over or pending a “peace” settlement before considering Ukrainian membership. Socor reports that some “influential voices” are suggesting that “Kyiv should join NATO after “freezing” the war along a stable armistice line, de facto accepting Ukraine’s partition, with NATO security guarantees applying de jure to the government-controlled territory only.” This would mean starting accession talks soon with the actual talks to commence only after a ceasefire is in place. Trump arrives in Washington at a time when Putin’s hybrid strategies of war in Ukraine have eviscerated commonly-held differences between war and peace. “Absent a political consensus in NATO over Ukrainian membership, certain European allies, including France’s President Emmanuel Macron, are holding informal consultations about post-conflict security guarantees to Kyiv by NATO members outside of NATO’s framework,” according to the Jamestown Foundation. The Biden Administration downplayed the discussions on possible forms of military assistance and defense industry cooperation by sending only an Assistant Secretary of State. For a European peace to hold the Trump Administration would need to formally extend the United States’ nuclear deterrence to Ukraine. Options under discussion in Europe include a “coalition of the resolute” to deploy forces to Ukraine as part of a possible armistice package, deterring further Russian attacks, says Secor. European officials are also debating, without any agreement, whether its military forces could perform non-combat logistical roles to free Ukrainian forces to fight. None of the possible courses of action has moved forward as all eyes are waiting on the incoming Trump Administration for clues about its intended level of support for a NATO framework and other non-NATO proposals. Daria Novak served in the U.S. State Dept.