Is The Economy Headed In The Right Direction?
– By Lisa Rutherford –
The election is looming. There’s a lot of talk about the economy. I get that people are concerned about it, and I sympathize. But here’s the thing. I lived through the 1970s and 1980s when inflation was high. I was a young mother with a child trying to make ends meet in Alaska. I remember adding up grocery items in my head before getting to check out to make sure I had enough money to pay. It wasn’t easy. I also remember not wasting money. I didn’t buy a lot of clothes, and when I did, I usually bought them at thrift stores. We didn’t go out to eat much and certainly didn’t buy a latte every day! I was able to buy my first home, a condo, in 1986, when rents were going up drastically. Although a mortgage seemed daunting at that time with the high interest rates, it also seemed the only way to stabilize my expenses.
Don’t get me wrong. The high rates today are making home buying particularly challenging when home costs have risen so much due to a variety of reasons including a limited supply for new buyers. Those of us who have homes with low-interest mortgages are now reluctant to sell, making the market even more challenging.
People complain about the economy being bad. However, I notice lots of cars with new car stickers, lots of people eating out and shopping, and lots of people traveling. Have we created a country of people who expect to be given things all the time but are unwilling to save to get the things they want like a home? Some don’t have the luxury of saving, but many do. Plus, it’s confusing when we’re told that consuming is good for the economy.
As we head into the final weeks before the November 5 election, both candidates are having to deal with the economic situation and convince voters that they are the candidate who can save folks’ “bacon” – literally and figuratively. Trump is asking voters if they’re better off now under the Biden/Harris administration than they were when he was president. But then we have to think, if things were so great then, why wasn’t Trump re-elected? Don’t give me the excuse that the election was stolen because that’s been proven to be false.
When Trump was in office, prior to the covid pandemic, many Americans were experiencing the benefits of an economy that since 2010 had been clawing its way out of the Great Recession (2007) and people over spent: bigger homes with low interest rates, bigger vehicles, and more. Now those things may be adding more burden and costs are being racked up on credit card debt, which is skyrocketing.
Here are some facts to help understand where we’ve been and may be headed.
GDP (Gross Domestic Product) is an indicator of how the economy has fared. “Real GDP” factors in inflation and other critical factors. Real GDP from 2016-2020, during Trump’s administration, ranged from 1.8% to -2.2% (the first year of covid) with a high in 2018 of 3% due to deficit spending. From 2021 (Biden’s first year in office) until 2023 real GDP ranged from 5.8% to 2.5%, even with the covid-19 vaccine, inflation increases, and bank failures being factored in. The current estimate of real gpd from the BEA (Bureau of Economic Analysis) for the second quarter of 2024 is 2.8%. Trump’s high was 3% while Biden’s was 5.8%.
By 2020 the unemployment rate had dropped back down below 4% after reaching a high of 10% in 2010 as we were working our way out of the Great Recession following the housing meltdown. There was a steady drop from 2010 under Obama to 2016, when Trump was elected, and it continued that downward trend after that. At the same time, the workforce grew slightly and inched above 63% by 2020 after lower participation during the post-recession years. But it was still below pre-recession levels.
By August 2024 the unemployment rate was at 4.3%, just .3% higher than the 2020 rate, and economists are arguing whether this signals the start of a recession. Economics is a tricky and complex field. Economists argue about the finer points of any economic situation. Recently, I heard it said that if an economist were in a room alone, they would argue with themselves! So, when it comes to predictions about our economy, it can get a bit dicey.
Trump’s “drill baby drill” promise won’t help jobs. The industry has not created new jobs for years in spite of the production increases over the past six years. It might help consumer prices due to shipping costs. But production was high in mid-2022 and so were consumer prices.
Each of us will have to look at our own lives to see how the economy has affected us. I know that many prices continue to be high, particularly in the grocery store. But prices are up just 1.1% over the past twelve months. And, it’s important to remember that the four recessions since the end of the Cold War occurred during the presidencies of Republicans: George H.W. Bush, George W. Bush (Obama inherited this) and Donald Trump. Now, there are various reasons for this, but it’s still a fact. The economy has performed better under Democrats. Don’t bite off your nose to spite your face. Get past the campaign rhetoric and promises and look at the facts!
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