April 15, 2022

Thought of the Week:

It’s been more than two years since the Coronavirus upended life in the United States. Today, Americans I come across find themselves in an environment that is at once greatly improved and frustratingly familiar—three-quarters of adults are fully vaccinated; the unemployment rate has plummeted from a high of nearly 15% in the first weeks of the outbreak; and sporting events and concerts are drawing large crowds. Yet, the landscape in some ways remains hauntingly unsettled—there’s the staggering death toll of the virus; an uneven economic recovery with wage gains offset by the highest inflation rate in generations; and political fractures that only seem to widen over everything from masks to crime rates. Amid this almost bipolar sense of life, it seems that a growing share of Americans appear ready to move on to a “new normal.” You hear the term bandied about all the time now. While Wikipedia defines it as, “a state to which an economy or society settles following a crisis, when this differs from the situation that prevailed prior to the start of the crisis,” I’m sure there is no single definition of what a “new normal” might mean. However, this past week, the circumstances surrounding the discussion of a Covid “new normal” reminded me of the way I describe the “new normal” the programs of the Salute Military Golf Association (SMGA) introduce to veterans returning from the battlefield. Simply put, the SMGA incorporates the game of golf into the mental and physical rehabilitation programs of post-9/11 veterans. 100% of attending veterans attest that SMGA programs have improved their physical well-being, and 92% say the programs have helped alleviate symptoms associated with Post-Traumatic Stress Disorder (PTSD). The SCOA Foundation has been a long-time supporter of the SMGA. So, what triggered this linkage between the two “new normals” in my mind? This past week, SMGA representatives accompanied six veterans to the Masters and nine veterans to the Hootie and the Blowfish Monday After the Masters Pro-Am. Watching these veterans interact with one another, patrons at the Masters Tournament, and even well-known celebrities, it was apparent that learning the game of golf did not just provide these heroes with a bridge from war to civilian society, but afforded a platform for a “New Normal” to exist. Although these veterans may never recognize the support the SCOA Foundation has offered, it’s not a reach to say that SCOA has helped countless veterans find their new normal.

Thought Leadership—from our Associations, Think Tanks, and Consultants:

Inflation is Surging; the American Enterprise Institute (AEI) Says that Means a Recession is Coming. Shocking inflation numbers heighten the odds that the U.S. economy is headed towards a hard economic landing, most likely before year-end. The reason is not simply that the Federal Reserve has no alternative but to tighten monetary policy to address inflation. Rather, it is because the Fed will be forced to do so at a time when the U.S. is experiencing equity, housing, and credit market bubbles. While 8.5% consumer price inflation, the highest since 1981, would be bad enough, making things worse is that inflation is broad-based and not confined merely to items impacted by Covid related supply chain issues. As such, inflation will prove less transitory than the Fed originally thought. Further complicating the task is the fact that wage pressures are increasing and inflation expectations are rising. In fact, hourly wages are rising at a 5.5% clip, while inflation expectations over the next five years have climbed to 3.5%, disturbingly above the Fed’s 2% inflation target. Recognizing that it has a serious inflation problem, the Fed has shifted to a more hawkish policy stance. In past inflationary cycles, the Fed has had little success taming inflation without precipitating a recession; there is no reason to think this time will be different.

White House Remains Quiet on BBB, now BABA Negotiations, Says Eurasia Group. Hoping to revive the Build Back Better Act, recently rebranded as the Build a Better America Act (BABA), the White House has taken a closeted approach, being careful not to rile Sen. Manchin (D-WV) before negotiations start in earnest sometime within the next several weeks. The Biden administration’s latest approach has frustrated party progressives who view the caution as a sign that any deal will effectively be crafted by Manchin, for Manchin. The West Virginia senator almost single-handedly tanked the spending package last year, and opposing positions over corporate tax rates between he and Sen. Sinema (D-AZ) threaten to derail the talks again. In fact, Sen. Sinema seems to have hardened her position against corporate tax hikes, and appears ready to backtrack on a prior agreement to raise taxes on high-income earners as well. Despite widespread Democratic interest in resuscitating the talks, Sen. Manchin remains opposed to his party’s position on the plan’s EV targets and continues to maintain his position on increasing domestic energy production through an “all of the above” energy policy, stances that will face extreme resistance from fellow Democrats. While analysts and lobbyists believe the legislation, repackaged as a deficit reduction plan, has about a 35% chance of passing into law, its’ limited scope may face fierce resistance from progressive Democrats who were optimistic about passing an expansive social spending package.

Observatory Group: Broadly Speaking, the Election is Republicans to Lose. The national political environment argues for Republicans being highly likely to win a House majority, and moderately likely to win a Senate majority, in the November election. If 2022 is actually the Republicans’ election to lose, the question becomes what is the biggest risk to a GOP sweep; and probably more specifically, what is the risk the GOP does not capture the Senate, where winning a majority is less certain than in the House? The answer boils down to one large unknown—who will be on the ballot on November 8 and what is the electability of that candidate? For competitive Democratic primary races, what is at stake is electability in the general election. Progressives who run and win primaries on anti-establishment platforms in swing states are likely to face defeat in November’s general election. For competitive Republican primary races, what is at stake remains Donald Trump’s political power within the GOP. The former President is playing an explicit role in many races, publicly backing one of the candidates. Where he has not, his presence is felt as candidates vie for his endorsement. It is unclear at this point whether, as a rule, Trump-backed candidates will fare better or worse in the general election. Ten competitive Senate races will determine the future of five seats currently held by Republicans and five seats currently held by Democrats. Primaries in nine of these 10 seats will determine which party can win in the general election. The one exception is Florida, where the two general election candidates are essentially decided, with the advantage going to incumbent Republican Senator Marco Rubio.

In Other Words (Quote): 

“Yes, I called it genocide because it has become clearer and clearer that Putin is just trying to wipe out the idea of being able to be Ukrainian.”

– President Joseph Biden

“From an atmospheric point of view, it’s a perfect storm of problems for the Democrats. How could you screw this up? It’s actually possible. And we’ve had some experience with that in the past.”

– Senate Minority Leader Mitch McConnell (R-KY)

Did You Know:

President Bill Clinton’s staffers held the first-ever White House Passover Seder in 1993, although President Clinton did not attend. President Barack Obama became the first sitting president to host a Passover Seder at the White House in 2009.  

GRAPH of the Week:

The U.S. trade deficit inched down from a record $89.23 billion in January to $89.19 billion in February. Although the data continues to be skewed by supply chain disruptions, the chip shortage, and higher costs for petroleum, the goods trade deficit actually pulled back from an all-time high, down from $108.60 billion to $107.47 billion.

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