State of the Economy: Jonathan Williams on The Ed Dean Show
Jonathan Williams, ALEC Executive Vice President of Policy and Chief Economist, spoke with Ed Dean on The Ed Dean Morning Show for Florida’s AM 600 & FM 101.1 about the state of the economy with the latest reports on GDP and economic development.
It’s really a mixed bag and a big decrease from the fourth quarter which came in way under expectation from consensus estimates. Some of the positives are that consumers are still driving economic growth with their purchases. They still have savings from pandemic-related payments, or their wages have gone up and they can spend more. That consumer spending portion of GDP is a driver that keeps it in positive territory. But whenever you see a GDP growth number, you should remember that GDP includes government spending.
In the strange accounting system we have here in Washington DC, the land of make-believe, government spending automatically grows GDP. We know in the long term they’ve racked up nearly $32 trillion of national debt that has to be paid off at some point. We’re paying it off now because of high inflation, and we will have to pay for it again when we pay the bills, so this is not a net positive. We’re just juicing the economy in the short term to keep the number positive. But those bills will eventually come due, which is important to remember when talking about GDP numbers.
On the negative side, two things are really dragging on GDP. One is obviously real estate. When interest rates go up, we pay a penalty for government debt – any overspending – which hurts real estate markets all across the country. And the most concerning piece dragging down GDP right now is that business investment is way down.