Because it takes the form of higher prices, Biden-Flation is a tax that hits working families hardest. According to a new report from Morgan Stanley, high inflation and steady increases in jobless claims are exhausting consumers.

Key Takeaways:

• Families are cutting back on spending, boding poorly for the overall economy: “Two-thirds of US consumers say they are planning to reduce spending over the next six months as a result of inflation, according to a recent survey of roughly 2,000 people conducted July 15 to 18 by Morgan Stanley. A similar percentage identify inflation as a top concern.”

• Families need relief, but are instead canceling their leisure, entertainment, and travel. “The number of people who said they intend to engage in leisure and entertainment has slowed from a rise of 7 percent earlier this month to a modest hike of 2 percent, while visits to shopping malls have dropped 14% and travel intentions are starting to cool. However, households with incomes of more than $150,000 ‘are resilient in their travel intentions thus far,’ the researchers said.”

• Families are so squeezed they’re cutting back on driving: “Consumption of gasoline — a usually inelastic good — declined in real terms by nearly 8 percent in July, according to FHN Financial’s calculations. ‘You can tell how squeezed families are by the fact that they are changing their driving habits so much,’ Low said.

• Because of Biden-Flation, lenders may start cutting off working families who need access to credit: Noting that the first stage of a credit tightening is borrowers recoiling because interest rates are higher, one economic expert said that a credit crunch is coming: “The second stage is lenders starting to cut people off. And we’re just at the beginning of that second stage.”

In an interview with Bloomberg, Chris Low, chief economist at FHN Financial, said: “Wages are not keeping up with inflation… it’s becoming increasingly challenging for households to pay their bills. People are starting to change their behavior in unusual ways in order to stretch their dollars a little long further.”

KEY BACKGROUND:

Consumer optimism has reached record-lows.

• From May to June, consumer confidence fell nearly eight points to a record-low.
• A majority of Americans report feeling “uneasy about the state of the country,” say things in America are “going badly,” and feel that the economy is “bad,” as prices continue to rise and optimism plummets in an economy damaged by the Biden Administration.

Americans are struggling as Biden-Flation accelerates.

• Under President Biden, workers’ wages have dropped nearly four percent, prompting a majority of Americans to take up bargain-hunting.
• At least 53 percent of Americans report spending anywhere between $101 to $500 more per month on groceries.
• For a majority of low-income households, rising prices have become a source of “major financial stress” as a new report confirms that inflation has wiped out 26 million low-income households’ savings since President Biden took office.
• For six months in a row, Main Street businesses have faced double-digit inflation and have lost jobs three out of the last four months.
• More than 60 percent of job creators fear inflation will drive them out of business.

Democrats’ $2 trillion so-called COVID stimulus fueled the inflation fire.

• Even former Obama-Biden Administration officials like former Director of the National Economic Council Larry Summers and former Chairman of the Council of Economic Advisers Jason Furman warned against Democrats’ $2 trillion so-called “stimulus.”
• Analysis from the San Francisco Federal Reserve finds that U.S. core inflation is higher than other nations – and attributes a part of it to Democrats’ policies. These findings were echoed in a report from the nonpartisan Congressional Budget Office (CBO).