Now it's evident how wasteful the Biden administration's 2021 spending spree was and why it caused the highest inflation in decades.
Thursday, the administration altered its 2020 and 2021 economic growth predictions. New numbers suggest the economy shrank less than believed during the pandemic and rebounded more swiftly.
The penultimate year of the Trump administration, when the pandemic hit, August GDP projections revealed a 3.4% drop. The updated estimate is 2.8%. Consumption in 2020 was higher than expected. The latest numbers reveal it fell 3%, not 3.8% as estimated.
This shows that Joe Biden's claim that Trump's "mishandling" of the epidemic "bungled" the economy is false. In the second quarter of 2020, when much of the economy was under lockdown, the economy shrunk by 29.9%, new data show. An earlier report said it shrank 31.2%. The next quarter, growth was revised up to 35.3%. At the time, Biden's campaign called Trump's economic campaign a "desperate scheme." Now we know the economy is growing.
The idea that Trump ruined the economy led to the disastrous American Rescue Plan, a $1.9 trillion spending spree under President Biden. Biden and fellow Democrats believed the nation's economic affairs were "bungled," so they could now say it needed to be rescued. In fact, they had to approve a big stimulus act to claim credit for a recovery that was already begun.
GDP projections predict 6.3% growth in the first quarter of 2021. The next quarter it climbed by 7%, up from 6%. Meanwhile, nondefense government expenditure rose 64.8% annually in the first quarter, up from 40.8%. Nondefense spending rose 7.3% from 2020's high pandemic level, far more than the original projection of 2.8%.
Personal consumption expenditures rose 8.1% in 2021, up from 7.9% before. Spending on durable goods rose 18.5% in 2020 on top of a 10% increase. These numbers are increased from 18.1% in 2021 and 7.7% in 2020. New estimates show 2020 services spending fell 6.6%, not 7.5% as projected. The next year, it rose 6.3%, a half-point over the expectation.
In short, Biden's enormous and unneeded fiscal expansion drove up demand so much that it set the economy on track for the worst inflation in four decades.
The preceding is a summary of an article that originally appeared on Breit Bart.