Ep. 1432 - The Coming Biden Recession

Episode Summary

Executive Summary: The episode argues that Biden-era fiscal and regulatory policy, combined with pandemic-era distortions, has produced 40-year-high inflation, weakened confidence in the administration, and set up a likely Federal Reserve response of higher rates and slower growth. It also covers the Canadian trucker Freedom Convoy, Democratic hypocrisy on protests, rising retail theft, and concerns that DEI priorities and weak leadership are undermining military readiness and foreign policy deterrence.

Main Topics: 40-year-high inflation and market reaction (Priority: 5/5): Shapiro frames inflation as the central economic story, citing CPI data, choppy markets, and rising bond yields as evidence that inflation is broadening and hurting consumers and investors. Biden administration policy as the cause of inflation (Priority: 5/5): He argues that excessive stimulus, continued spending, regulation, and refusal to reverse course are driving inflation and risking recession or stagnation. Federal Reserve dilemma and recession risk (Priority: 5/5): The show explains that the Fed may need aggressive rate hikes and balance-sheet reduction to restrain inflation, but that doing so could trigger recession and higher debt-service costs. Freedom Convoy and COVID mandate backlash (Priority: 4/5): Shapiro discusses the Canadian truckers’ blockade, criticizing leaders for enforcing vaccine mandates and condemning left-wing reactions that treat some protests as acceptable and others as intolerable. Democratic course correction on crime, schools, and mandates (Priority: 4/5): He highlights reporting that even blue-state Democrats are pulling back from progressive COVID, education, and crime policies because voters are rejecting the consequences. Military readiness, DEI, and foreign policy weakness (Priority: 4/5): The episode argues that DEI-focused military policy and Biden’s perceived weakness signal reduced deterrence, especially as Russia pressures Ukraine. National debt and long-term stagnation (Priority: 4/5): Shapiro warns that rising debt, future tax increases, expiring tax cuts, and more regulation will create medium- and long-term economic stagnation beyond the current inflation spike.

Key Arguments: Inflation is not merely a supply-chain issue; stimulus and overspending materially worsened it. If the Fed raises rates aggressively, it may reduce inflation but risks recession and slower investment. Biden’s approval problem reflects public recognition that his major initiatives have not improved daily life. Europe’s comparatively lower inflation is presented as evidence that the U.S. response—especially massive spending—was excessive. Democrats are beginning to retreat from lockdowns, school closures, and anti-policing politics because those policies are producing visible failures. The Freedom Convoy is portrayed as a test of whether governments tolerate dissent equally, regardless of cause. DEI emphasis in the military is criticized as subordinating merit and lethality to ideology, weakening deterrence. Rising debt and expiring tax cuts will make future fiscal pressures worse, creating a stagnation trap.

Data Points: U.S. inflation rate (January annual CPI): 7.5% - Highest level since February 1982, according to the Wall Street Journal segment cited in the transcript. Core CPI annual increase: 6.0% - Excluding food and energy, described as the highest rate in nearly 40 years. Inflation rate in 2019: 1.8% - Used as the pre-pandemic comparison point. Consumer disapproval of Biden: 58% - CNN poll mentioned in the discussion. Americans saying Biden has done nothing for them: 56% - CNN poll finding on what the president has done for them. Americans saying Biden helped the economy: 15% - CNN poll result. Americans saying Biden helped with COVID: 6% - CNN poll result. S&P 500 futures change: -0.6% - Pre-market reaction to inflation data. S&P 500 previous close: -1.8% - Described as the prior day’s decline. Netflix pre-market move: -1.3% - Example of tech weakness cited in market commentary. Nvidia pre-market move: -1.0% - Another example of tech weakness cited in market commentary. Average monthly loss in purchasing power: about $230-$240 per household - Shapiro’s estimate of what inflation is costing the average American household. Jan monthly grocery increase: 1.0% - Seasonally adjusted increase in groceries from December. Meat prices year-over-year: 12.2% - Reported as significantly above year-ago levels. Electricity prices year-over-year: over 4% - Price increase mentioned in the inflation rundown. Projected net interest costs by 2051: 8.6% of GDP - CBO estimate cited from the New York Times discussion. Projected total interest payments over three decades: about $60 trillion - Long-term fiscal burden highlighted in the debt discussion. Chance of a 50 bps Fed hike in March: 99% - CME FedWatch pricing mentioned in the transcript. Potential rate hike by July 1: 1 percentage point - St. Louis Fed President James Bullard’s hawkish position. Municipal workers in NYC facing dismissal: up to 3,000 - New York City workers potentially fired over vaccine refusal. Retail theft increase since pandemic began: 300% - CVS spokesman’s figure cited in the shoplifting discussion. Federal budget debt growth over two years: $7 trillion - Shapiro’s description of recent debt expansion.

Pivotal Quotes: "Inflation is not just a supply chain issue, and the stimulus likely made it worse." — Narrative attributed to 538 analysis cited by Ben Shapiro: Used to support the claim that U.S. stimulus worsened inflation beyond supply-chain disruptions. "There’s not a corner of this nation where hardworking families are able to escape the noticeable impact of this inflation tax." — Joe Manchin: Quoted while arguing against further spending and cautioning the administration about inflation. "The only real options are to be patient or to cause a recession." — Neil Irwin, Axios: Summarizes the Fed/Biden dilemma: suppress inflation slowly or tighten enough to trigger contraction.

Implications: Listeners are being warned that inflation may force painful Fed tightening, while political backlash could drive Democrats toward course correction on spending, mandates, schools, and crime. Long-term risks include higher debt burdens, slower growth, and weaker national deterrence.