When Good News is Bad News
Quietly it appears the economy is recovering.
Many people are not going to want to hear this. It looks as though the economy is beginning to recover. This, of course, has nothing to do with the horrendous policies of the Rutabaga. Indeed, it kinda supports a notion I’ve had for years: the American economy is so strong it’s almost impossible for one president or one administration to tank it completely.
The first piece of evidence is that a key factor in economic growth (the most important, in my mind) is productivity growth, and the U.S. has now seen productivity recover. It literally soared under President Trump by almost 20% from 2019-2020 when the China Virus hit. That was a direct reflection of President Trump’s incredible energy-generating policies, which energize everything else. Under Rutabaga, it dropped to a negative 7%, or a fall of almost one-third. Now, however, it has crawled back to a respectable 5% growth and the U.S. is actually growing faster than Chy-na.
Contrary to what liberals such as Noah Smith argue, we are not at “full employment.” We are at full employment only when you don’t count those who stopped looking for jobs or when you don’t account for people having to work multiple jobs to keep up.
Nevertheless, I asked a friend of mine, who was a prof of finance at Columbia, worked in Trump’s Comproller’s office, and otherwise is a sheer genius, what was going on with the economy. He responded with no fewer than nine charts, virtually all of them showing positive trends. Even inflation has dropped some. Yes, here in Arizona gas has fallen from almost $4.50 a gallon to $3.60 a gallon. Of course, the heating oil bills may offset that. We’ll see. Food inflation, according to all experts, its probably here to stay. Some of this, however, is good news for MAGA theorists, in that decoupling from China is “a” driver in these higher prices. And ultimately decoupling is a good thing.
Real wages have not kept up, or at best have stayed even. But what strikes me as significant is that even those who espouse the happy talk about the economy admit the people don’t “feel it” yet. Here is my concern: how long before they do? What if that comes in the middle of the 2024 election? Rutabaga should get no credit whatsoever for this recovery. Consumer sentiment is recovering some but nowhere close to where it was under Trump.
Much of this is government spending. Much is business, under the iron grip of gubment, “investing” in solar and electric vehicles. We all know how that’s going: Ford is losing $30,000 on every electric truck sold, Chevy and Stellanus have delayed or halted more EV production, and car lots can’t sell them. When gubment goodies and subsidies run out for these things, that “investment” will be eaten. And consider this: economic indicators down for seven months.
In the meantime, there is a gap between a recovering economy and the experience of ordinary people. That said, I notice no shortage of people buying stuff, going on trips, or eating out at inflated prices. Mrs LS went to an outdoor mall here in Phoenix the other day and it was hoppin’. “Well, people are using credit.” Maybe. I have seen conflicting evidence on this. One source said foreclosures, credit card defaults are rising, but another said defaults are at 3%, same as it ever was.
I asked my genius friend, “given the collapse of the cities, the invasion of illegals that will cost a fortune, the heavy hand of the Rutabaga’s agencies, and the astoundingly high national debt, how can we avoid a serious problem?”
His response: “Good question. We’re screwed for the next couple of decades.”
Larry Schweikart
Rock drummer, Film maker,NYTimes #1 bestselling author
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