Yahoo Finance US economy ‘ready to crack’: Former Home Depot CEO blasts ‘series of debacles and missteps’ by the Biden admin
The U.S. economy may soon enter a perilous phase, according to Bob Nardelli, former CEO of Home Depot and Chrysler.
In a May 20 interview with Fox Business, Nardelli used a metaphor to illustrate the state of the country since President Joe Biden took office.
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“What I've seen over the past three and a half years is a series of debacles and missteps have created a tremendous pressure on the fault lines, if you will, of our economy and they're about ready to crack,” he said.
With the presidential election approaching, Nardelli believes the next president will face significant challenges.
“Whoever gets the next step in the White House is going to be hit with a wrecking ball in trying to correct the missteps and the overspending of this current administration,” he stated, adding that “we're in for a rough time.”
Here’s a look at what he means by that.
‘War on fossil fuel’
Nardelli criticized the Biden administration's energy policy.
“Day one of this administration, they started the war on fossil fuel,” he stated.
He drew a parallel between Biden's push for electric vehicles and the Obama administration's initiative to implement stricter fuel efficiency standards for cars.
Reflecting on his experience in the automotive industry, Nardelli remarked, “When I was working at Chrysler during the Obama administration, they had a CAFE standard, and they were forcing us to produce small cars. For example, the Fiat 500 turned out to be a tremendous flop.”
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He is concerned about the potential consequences of the current administration’s EV mandate.
“Now we got the Biden administration pushing EVs, we have a similar situation, but my experience is, unless you have a compelling reason, whether it be features and appearance, technology, body style, the consumer cannot be pushed into buying something they don't want to buy,” Nardelli said.
To be sure, EV sales have been booming in America. According to S&P Global, sales crossed the one-million-unit mark for the first time in 2023, up about 52% compared with 2022. The EV market share reached 7.5%. However, this was “still slower than some automakers and industry observers anticipated.”
Nardelli is also concerned about the strain the EV transition could place on the nation’s power grid. Additionally, the increasing use of artificial intelligence could further exacerbate this pressure.
“Now we see a tremendous drain on EV. And then on top of that we're seeing about 10% more on ChatGPT versus a Google search. So again, utilities are not in a position — they've been shutting down coal plants because of this war on fossil fuel, and the grid is in a very, very fragile state,” he cautioned.
Inflation hits hard
Nardelli highlighted a concern many Americans have already experienced firsthand: inflation.
“The inflation pipeline has a long tail, and I'm seeing it across many, many areas both on raw materials, and of course we see it on labor,” he said.
He also touched on housing, a key component of inflation. He pointed out that rents for a two-bedroom apartment in downtown Atlanta have surged to around $3,500 a month, claiming that such high housing costs can significantly impact household finances.
“Even though we've seen 40% wage increases in some cases, it's being totally, totally absorbed with inflation and the cost of living,” Nardelli remarked. “This is really a devastating impact on the consumer today.”
According to the Bureau of Labor Statistics, the U.S. consumer price index rose 3.4% in April 2024 from a year ago. Although this rate of increase has decreased from the peak of 9.1% in June 2022, the prices of many necessities remain elevated.
For example, since the beginning of 2020, the index for food prices in America has risen by 25%, and the shelter index has increased by 23%.
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