Unemployment is minimal. The GDP is growing. The rate of inflation is subsiding. Are we approaching Goldilocks?
Slate Money explained why.
U.S. Economic Strength
Slate Money cited five reasons that “America is Beating Everyone.”
They began with Covid spending. While Europe, for example, had a support system that already existed, we needed to create one. And we did. Individuals and businesses received checks they would soon spend or save. At $5 trillion or so, it was massive.
At econlife, we saw where we spent more:
Our second economic boost came from our energy supply. We could have been hit harder when Russia invaded Ukraine. But because we are an energy exporter, rising oil prices impacted us less than our European friends. Yes, gas and oil prices went up but less than mostly everywhere else. Add to this that, as an exporter, we could benefit from high prices. Consequently, even rising energy prices have an upside.
Next, becoming a bit controversial, we should recognize the benefits of immigration. Now, with such low unemployment, immigrants do jobs that otherwise would not get done. Also, it helps that immigrants tend to be young. As a result, especially with our pay-as-you-go Social Security system, they create a growing labor force that can afford to pay me and my baby boomer sisters and brothers. Quantifying the benefit, the Congressional Budget Office said the GDP will get a $7 trillion bump from immigration.
Our fourth boost takes us back to a legislatively proactive Biden Administration. Through the Inflation Reduction Act and the Chips Act, here too, we have an economic stimulus. In addition, domestic manufacturing is on the upswing.
And finally, perhaps related to #4, we’ve had labor churn. Below, you can see the April 2020 pop in the unemployment rate to 14.8%:
Again, seeing the upside, we can say that after people left their jobs, they found something better. According to Slate Money, the “great reshuffle” followed the “great resignation” with workers getting bigger paychecks.
Our Bottom Line: Goldilocks
A Goldilocks economy is not too hot, not too cold, but just right.
And yes, all is not “just right.” I know I did not mention consumers coping with high grocery prices and concern with inequality. Still, the seeds of the Goldilocks side of our economy can sprout and spread.
My sources and more: Thanks to Slate Money’s Emily Peck for today’s post.
