Commentary
The third-quarter real GDP growth of 2.8 percent was lower than expected, leading financial journalists to reassure the public about the country’s prosperity, despite the fact that many Americans are struggling financially.
The increasing prices of goods have created confusion about what constitutes a “good price” or a “bad price.” This uncertainty is exacerbated by the fluctuating prices across different stores, making it challenging for consumers to make informed purchasing decisions.
Moreover, the inflation-adjusted GDP figures present a misleading picture of economic growth, as they fail to account for the impact of rising prices on retail sales and factory orders. This inflationary pressure distorts the data, making it appear as if there is significant economic growth when, in reality, it is just a result of inflation.
The Consumer Price Index (CPI) also fails to accurately reflect the true inflation rate, as it excludes certain expenses like interest, home prices, and insurance costs. This omission leads to a distorted perception of the actual cost of living.
An analysis of industry data suggests that inflation has been underreported for the past four years, indicating that the economy has not grown as much as official reports suggest. The discrepancy between reported economic growth and actual consumer experiences highlights the need for a more critical examination of GDP data.
The lackluster economic growth in recent years is concerning, especially when compared to the postwar era’s robust growth rates. The reliance on government spending as a driver of economic growth is unsustainable and may lead to long-term economic challenges.
As the country approaches the 2024 election, it is crucial for policymakers to address the underlying economic issues and avoid relying on misleading indicators of economic health. By acknowledging the true state of the economy and taking proactive measures, the country can avoid a potential economic downturn.
The news of the tanking economy may not come as a shock to the average person, who is likely relieved that the national media is finally acknowledging what everyone already knows. The blame for this economic downturn will likely fall on the current occupant of the White House.
Adding to the concerns is the emergence of a second wave of inflation. Data from Truflation shows that inflation has exceeded trend levels, and the outlook is not promising.
The Federal Reserve’s shift from fighting inflation to preventing recession has led to another round of quantitative easing, with $1.1 trillion added to the U.S. money stock in the last year. The effects of this money expansion on general prices typically take 12-18 months to materialize, a trend that has been consistent in the last four years.
If these projections hold true and no mitigating factors intervene, we could see another wave of inflation hitting the U.S. economy in the summer of 2025. This could pose a significant challenge for the new administration, which will have promised to tackle inflation.
While there are ways to combat inflation through Fed policy, industrial deregulation, and fiscal measures, it will take time for these strategies to take effect. Price controls, in any form, are unlikely to be effective and could create market chaos.
The U.S. economy still holds vast potential for growth, but realizing this will require substantial structural changes, bold leadership, and tough decisions. The question remains whether we are prepared for this challenge. Only time will tell.
(Note: The views expressed in this article are the opinions of the author and do not necessarily reflect those of The Epoch Times.) Please rewrite the following sentence: “The cat chased the mouse around the house.”
Source link
