Larry Kudlow: This will lead to recession

Joe Biden spoke to the AFL-CIO today in Philadelphia. I hate to oversimplify, but let me play you some sound that captures the thrust of his speech. Take a listen: 

JOE BIDEN: "I don't want to hear any more of these lies about reckless spending. We're changing people's lives." 

Well, with all due respect Mr. President, you did engage in reckless spending with your $2 trillion spending mistake in March of last year that launched a terrible inflation. Economic greybeards in your own party told you not to do it. They told you it was going to trigger inflation. 

They were right. You were wrong. Janet Yellen was wrong. Jay Powell was wrong and you have changed peoples' lives — for the worse. 

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You love to talk about middle-income people and you want to be the most pro-union president in history, but it is precisely those working folks whose lives have deteriorated enormously because of your inflation tax, which of course falls most heavily on them for necessities like food and gasoline. Those prices are soaring. You launched it.  

I know you never want to talk about it and when you do, you blame everybody but your policies, but before anybody heard of Vladimir Putin going into Ukraine your excessive spending and borrowing that was monetized by the Fed's money printing has now landed us most recently with an 8.6% consumer price index, with gasoline up 49%, food up 10%, electricity up 12%, and new cars up 13%. Just saying, sir. Those are life-changing numbers. 

Middle-income working folks will probably have something like a $5,000 increase in their cost of living in the months ahead. They can't afford it. Their inflation adjusted real wages have dropped 3%. 

In other words, your reckless spending spree means that folks are working harder and getting paid less. Look in a full-length mirror and what do you see? You see the very body that has decimated the middle class with an inflation tax. 

Today's producer price index was just as bad as the CPI, maybe even worse. The topline was up 10.8%. Prices for goods up nearly 17%, for food: 13%, for energy: 45%. 

The worst part is that the 3-month change is faster than the 12-month change, which means inflation is getting worse. There's no peak here and your Federal Reserve appointee, Jay Powell is now left with no choice but to jack up interest rates faster and higher than anybody in government thought necessary. It will lead to recession. 

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It's already crashing stocks. Inflation expectations are rising according to the latest NFIB small business survey and the New York Fed survey. 

I know you play the blame game, Mr. President. Beside Vladimir Putin, you're running against something called "MAGA." The only "MAGA" I know, though, is your MEGA economic policy mistakes, because beside your inflationary spending spree, and by the way, let’s not forget that you wanted a $5 trillion additional social spending bill. Thanks to Joe Manchin and Kyrsten Sinema, you didn't get it, but you wanted it. You pushed for it.  

So, please quit bragging about deficit reduction. You've never met a pay-for in your entire life. 

Today in Philly, you proudly boasted of your attempts to raise taxes across the board. Thirty-six tax hikes in your FY '23 budget, eleven alone on energy, $3.5 trillion in total — what a terrific idea! We're going into recession and you're raising taxes. We need more energy, but you want to tax all the fossil companies, which brings me to my last point. 

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You have decimated the oil and gas business. Your environmental regulations have strangled fracking, drilling, pipelining, LNG exporting and refining. You canceled the Keystone XL pipeline. You canceled drilling in Alaska. You canceled drilling in the Gulf of Mexico. Your EPA has drawn up restrictions that have emasculated not only the fossil business, but infrastructure of all kinds. 

Right now, oil is badly under supplied and so is gasoline. These are self-inflicted wounds. You have only yourself to blame. Please go back to that full-length mirror, but you know what, sir? The cavalry is coming.

This article is adapted from Larry Kudlow's opening commentary on the June 14, 2022, edition of "Kudlow."