Memo to Demos: Stop Hampering Economic Growth
They’re wrong to keep pushing for more government intervention.
Will the jobs market ever recover? Will the supply chain be restored? Is the economy headed toward recession? Those are the questions being discussed at kitchen tables across the nation, and the answers are unclear.
On the first question, this morning’s October jobs report brings good news, and for the first time in months, the report exceeded expectations. Headline unemployment fell to just 4.6% as the U.S. added 531,000 jobs, surpassing the 450,000 expected. Moreover, reports The Wall Street Journal, “Job growth was also stronger in August and September than previously thought. The economy added 312,000 jobs in September instead of the initially reported 194,000, the Labor Department said Friday. August’s gain also was revised higher to show 483,00 new jobs instead of the previously reported 366,000.”
We’ll make several quick points. The COVID Delta variant slowed the economy in August and September, though, as it turns out, not quite as much as feared. School closures and hybrid schedules affected the ability of parents, especially single moms, to work; that problem seems to have largely subsided. Rapidly rising wages and benefits actually did attract workers, especially after the government finally quit paying people so much more to stay at home.
One troubling thing remains on the horizon: Joe Biden’s vaccine mandate is beginning to kick in, as are mandates from particular companies, and that will be a drag on employment. How big a drag remains to be seen.
Questions about the overall health of the economy remain, as well. The jobs market is still far short of the workers needed, as there are still nearly five million fewer Americans employed now than there were before government shut everything down last March. That’s a huge contributing factor to the disruption in the supply chain, which in turn is part of the cause of rampant inflation that is at 30-year highs and that is likely underestimated.
Food prices are especially bad, with everything from fertilizer to corn feed driving prices higher, often by 10% or more. “Thanksgiving 2021,” said The New York Times recently, “could be the most expensive meal in the history of the holiday.”
We can only wistfully remember the heady days of July, when the Biden administration was proudly telling us how it had saved us 16 cents on Independence Day cookouts.
Meanwhile, economic growth in the third quarter slowed to just 2%, despite the fact that we’re still supposed to be recovering from the pandemic shutdown. That certainly isn’t recession territory, but it is reminiscent of the plodding growth of Barack Obama’s record-slow recovery. The dramatic slowdown has sparked at least the discussion of fears of recession. Such talk can sometimes be self-fulfilling prophecy.
Federal Reserve chair Jerome Powell even said recently, “Supply constraints and elevated inflation are likely to last longer than previously expected and well into next year.”
There’s a word for rising prices combined with slow growth: stagflation. That came to define Jimmy Carter’s single presidential term, and it may come to define Joe Biden’s.
Democrat devotees to Keynesian economics have already used a slowing economy to justify passing Biden’s Build Back Better spending scheme. The truth, of course, is that government caused the economy to tank last year, and government spending has largely hampered, not helped, recovery. Trillions more in government spending, much of which is direct wealth-transfer payments to individuals, will only make matters worse by once again increasing demand without boosting supply. Yet Democrats will argue that’s exactly what they must do — worse, while increasing taxes on suppliers.
We’re not here to hit the panic button or even to just play the role of Debbie Downer. We are here to say that Democrats in Washington and elsewhere would do well to get out of the way and let the free market sort itself out sooner rather than later. Sometimes, “do something” is the worst advice.
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