91. Spooky Economy: Recession, Inflation, and State-Level Jobs Report
Latest on recent reports that influence your livelihood related to the economy, inflation, and jobs along with paths to get out of this recession caused by progressive policies to let people prosper.
Hello Friend,
This is the day the Lord had made, I will rejoice and be glad in it. I hope you will, too.
Happy Halloween! Good meme by the Cardinal Institute in West Virginia.
Hot Take: Let’s take a look at the recent U.S. GDP, CPI inflation, and state-level GDP reports.
State and U.S. Economic and Policy Take: The U.S. shows some improvement in GDP but the recession is likely still here so more pro-growth policies are needed of cutting spending, taxes, and regulations.
Personal Take: The first month of Ginn Economic Consulting has been fruitful.
Let People Prosper Show: Please subscribe on YouTube, Apple Podcasts, Spotify, and Google Podcasts: Recent guests have included Mark Moses on local government finances; Jonathan Williams of ALEC on Rich States, Poor States; and John Hendrickson of Iowans for Tax Relief Foundation on economic history and Iowa. Upcoming episodes include Grover Norquist of ATR on cutting government and the election, Samuel Gregg on the Next American Economy, and Marc Goldwein on Responsible Federal Budgeting.
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HOT TAKE
Top Point: This has been a painful situation that will be felt for years if not decades that most, excluding Paul Krugman, won’t see as a huge success because of at least the following in my tweet below, and more details on economic issues.
U.S. real gross domestic product (GDP) data were released recently indicating that this inflation-adjusted economic output increased by 2.6% on an annualized basis in the third quarter of 2022. While this appears as good news to see an increase in real GDP after two consecutive quarters of declining real economic output (Q1: -1.6%, Q2: -0.6%), there continue to be weaknesses in the economy noted by the fact that real GDP would have declined again in Q3 had inflation been as high as it was in the last three quarters, which was primarily from the decline in energy prices in Q3 after a steep increase in Q2, and excluding net exports. (see my thread on Twitter—recall that I use Tweet Delete to delete my tweets after 30 days which is why I use snips of each one and my older posts won’t have certain tweets…why keep them just to have folks use them at your expense…nope!)
And note that there are multiple recessions, which every recession since 1950 has had at least two consecutive quarters of real GDP declines, that have had one quarter (or more) of a real GDP increase while still counting as a recession. This chart looks at nominal GDP, GDP implicit price deflator (used to measure inflation for GDP), and real GDP (nominal GDP growth minus GDP implicit price deflator inflation).
The 2022 recession is likely still with us or will soon be a double-dip recession as things will reverse as inflation picks up and net exports moderate based on weaknesses in the report for Q3:2022.
Inflation: Inflation is always and everywhere a monetary phenomenon as increased demand from the Fed excessively increasing the money supply above the supply of goods and services, which are influenced by government spending, taxes, and regulation, creates higher inflation.
We have seen this lately as the latest CPI inflation data show that the overall rate was up 8.2% year-over-year through September 2022 and the core, which excludes volatile though needed food and energy prices, was up 6.6% over the last year. While the headline rate has moderated from recent highs, the core continues to increase showing underlying inflationary pressures and these rates remain at 40-year highs. The key way to correct this high inflation and potentially reduce prices to help with affordability problems across the nation is for the Fed to reduce its balance sheet more aggressively as I recently noted here. By the way, I recommend following Charlie Bilello who provides some great charts on the markets and Fed policies, even if I may not always agree with his analysis.
The Fed has been raising its federal funds rate target to the current 3-3.25% at the fastest rate since Volker in the late 1970s and early 1980s but the balance sheet has barely budged compared with the rapid increase over the last couple of years.
As the balance sheet increases, this grows the money supply thereby reducing the value of the dollar and our purchasing power which stifles our ability to prosper and hampers overall economic activity as those dollars distort production at each stage of the process (Cantillon effects).
State-level GDP Report: The Bureau of Economic Analysis recently reported on state-level real GDP for Q2:2022. How did your state do? Recall that the U.S. real GDP declined by -0.6% in that quarter so you’ll notice that most states declined. Texas had the fastest increase, which still has issues that I’ve noted in a previous policy brief to deal with like high local property taxes, with Florida right on its tail.
Louisiana, where I wrote this blog post for Pelican Institute, took a big hit falling 3.0%, ranking fifth worst in the nation.
Here’s my recent take on the state-level jobs report and what’s going on in Louisiana and other states.
There are lots of improvements to do in most states as they remain far below their pre-shutdown in February 2020 for private sector employment (chart by Erik Randolph at Georgia Center for Opportunity).
States are where the laboratory of competition must happen in our genius system of federalism. These are also the places that must continue to fight the oppressive progressive policies of the Biden administration and this Congress. Hopefully, as Larry Kudlow puts it, the cavalry of liberty-minded candidates is coming in the election next week so that there is a return to free-market, pro-growth policies that best let people prosper.
We need to get back to basic economics, as I discussed in my recent op-ed.
TAKE ON STATE ECONOMIES & POLICIES
Texas, Louisiana, and other states need school choice: It’s for the kids!
Tax Foundation’s new state business tax climate report shows which states have more opportunities for job creation to let people prosper.
No wonder so many people don’t want to go back to work: Handouts!
Businesses keep fleeing high spending, high taxing, high regulating states.
Excessive progressive policies at all levels of government must end.
TAKE ON U.S. ECONOMY & POLICIES
Government spending is a bipartisan problem. Make spending bad again!
Diesel fuel shortages with just 25 days of supply remaining have been hitting the headlines lately, hopefully, it is something the market will solve without more government getting in the way.
This happens too often from government failures, like the national debt.
Interesting take by CRFB on ways to reduce the deficit over time and here is my approach to the Responsible American Budget.
Government is too big as it has too much influence on economic activity.
PERSONAL TAKE
The first month of my new venture as president of Ginn Economic Consulting has been a success. It’s been a rollercoaster of a month as we’ve had the flu run through our family (our 6-month-old baby girl had it twice this month with strain A and then B). But the resiliency of our family is grounded in our faith in Christ that things will continue to improve. And while I took a leap of faith in this new venture, I have been working hard to keep up with the work that I’ve loved doing. It’s going to be a process of smoothing out the kinks in my workflow, schedule, and lessons on new programs and states (especially Louisiana), but it has been very rewarding to put my calling to let people prosper to work in many avenues. Please connect with me at any time if I can be of service to you. If you subscribe and receive my emails, just reply to the email and I’ll receive your note.
The family is doing well overall now after the illnesses. I’ll be in Baton Rouge soon for a couple of days learning more about the legislature there and hanging out with the fantastic crew at Pelican Institute. I’ve also been busy starting the Let People Prosper newsletter for Young Americans for Liberty (YAL) and have been working with them on getting national interviews and on social media to get the good word about free markets and liberty out for the best opportunities to let people prosper.
Check out my interview with Rachel and Taylor Barkley on “We’re the Barkleys” podcast on whether we’re in a recession and what it means to you.
Don’t miss my conversation with Eric Nager on his Plan For America to help with the looming insolvency of the nation’s large mandatory spending programs.
CLOSING TAKE
Along with government spending limits, we need major reforms and rules on the Federal Reserve, with the ultimate goal to End the Fed.
And here’s another quote recently that we should do more of:
I’m praying that our light will shine for what God’s will is for each of us.
Have a blessed day! Let people prosper!