Don’t Get Too Excited About GDP
Last year’s 5.7% growth indicates American business is resilient *despite* Biden’s policies.
The U.S. economy showed some health in 2021, including the new report that it grew by 5.7% for the year and 6.9% in the fourth quarter. The yearly number marks the fastest growth since it was “Morning in America” and Ronald Reagan was running for reelection in 1984.
Naturally, Joe Biden celebrated the GDP numbers. “For the first time in 20 years, our economy grew faster than China’s,” he said. “This is no accident. My economic strategy is creating good jobs for Americans, rebuilding our manufacturing, and strengthening our supply chains here at home to help make our companies more competitive.”
Fact is, American businesses created good jobs, not Biden, and our economy is growning despite his “strategy.”
After the horrific year of 2020, in which government shutdowns in a vain attempt to control the coronavirus knee-capped the economy, 2021 had almost nowhere to go but up. For that, we can largely thank the policies of Donald Trump, who got government out of the way of business growth, thus fueling a roaring economy for three years before COVID hit, and who did what he could (i.e., pushing a quick reopening and fast-tracking the vaccines) to get things rolling again after the shutdowns. Biden inherited Trump’s economy.
Moreover, notably most of the economic growth in 2021 was not shared nationwide but was generally limited to GOP-led states. That provides a helpful illustration of why Democrat polices are bad, but we’re not after illustrations — we want real economic growth for our nation.
As the Wall Street Journal editorial board put it: “Imagine if the Biden Administration had focused primarily on the pandemic as it took power a year ago. Get the vaccines out, accelerate Covid therapies, and let an economy poised to soar take off on its own. No $1.9 trillion ‘relief’ bill in March, no threat of new tax increases and spending to ‘transform’ American society.” It’s not hard to believe that the economy would be far stronger.
Looking ahead, the economy faces serious headwinds in 2022 that all the “experts” say are going to slow growth to a crawl. All of us rubes in flyover country understand that too, which is why, according to the Pew Research Center, “a sizable majority of Americans (72%) say economic conditions are only fair or poor.”
Indeed. When Joe and Jane Six-Pack see high gas prices, no workers at their local restaurants, and empty store shelves, they don’t all of a sudden become giddy about great GDP numbers.
Inflation is running at a 40-year high of 7% right now, which could be inflating GDP by temporarily padding the bottom line for many businesses, but its lasting effect is to reduce consumption (i.e., economic activity).
Those businesses can’t find workers, either. Sure, the headline unemployment rate is a stellar 3.9%, but there are something like 11 million job openings and six million unemployed people. There are roughly four million fewer people working than in February 2020. All of that is driving up the price of labor (Democrats couldn’t pass a $15 minimum wage legislatively, so they torpedoed the labor market to achieve it), which causes more inflation. Lather, rinse, repeat.
The supply chain is a wreck. Stores can’t stock shelves and manufacturers expect supplies and prices to continue being a problem. Ironically, the lion’s share of fourth-quarter growth was massive inventory purchases. That is unsustainable.
In short, Biden put his “I did that” sticker on good GDP numbers when in reality it belongs on gas pumps, inflation and broken supply lines. The American economy is resilient, and 5.7% growth last year is great news. We hope that continues this year. But Biden and his Democrat pals are going to have to get out of the way, and stepping aside is not something leftists do well.
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