Last week, Americans witnessed the inflation rate reach 9.1%, the highest it has been in four decades. This continues to prove unnecessary government spending has severe consequences, yet the Biden Administration is again pushing new tax and spend legislation. Additionally, the University of Michigan's latest consumer sentiment index reached its lowest level ever recorded in June. Many Americans cited inflation as the largest factor leading them to believe the worst economy ever is right around the corner.
Another troubling factor contributing to economic woes for consumers and small businesses is the decline in labor force participation. After plummeting during the pandemic from a rate of 63.4% in early 2020, it continues to falter. The labor force fell by a seasonally adjusted 353,000 in June with prime-age workers (those 25 to 54 years old) leaving the labor force at an even faster pace than other workers.
After months of the government paying for rental assistance, extended and enhanced child tax credits, stimulus payments, additional and enhanced unemployment assistance, etc., President Biden and the Democrat Majority in Congress must join Republicans and prioritize policies incentivizing economic growth and employment.
To better highlight and bring focus to the real-world impact of inflation, my Republican colleagues and I on the Transportation and Infrastructure Committee hosted a roundtable with industry and local government stakeholders to hear how inflation is affecting them with a particular focus on the impact to pending infrastructure projects. I was pleased to welcome Wilmington City Councilman Luke Waddell to the conversation to describe the challenges of rising inflation on municipal infrastructure projects in the City of Wilmington.
Everything from the cost of fuel and materials, to supply chain delays, to energy instability, to workforce shortages have been delaying infrastructure projects across the country. More and more critical projects are being scrapped, delayed even further, or coming with a much higher price tag to be paid for by the taxpayer. This is going to put a real financial strain on local governments.
Additionally, families and communities across NC-07 and America are being hit hard by the same inflationary pressures further delaying or scaling back critical projects. The Administration must stop proposing unnecessary spending, stop creating burdensome regulatory barriers and stop preventing domestic energy production. Meanwhile Congress must stop unnecessary spending, pass legislation that incentivizes work and innovation, and President Biden must sign these measures into law to help turn this around soon. (Of course, none of this is going to happen under the current administration and Party control of Congress.)
Tax increases, more money given to consumers to spend, more regulation, and less energy production are the wrong policies to achieve lower inflation and economic growth. It’ll result in the continuation of high inflation and lead to potentially devastating economic conditions over the next two years regardless of what the Federal Reserve does. In fact, under the above scenario of potential tax increases and even more government spending coupled with more regulation and high energy costs, the hike in interest rates will drive the economy further in the ground.
