don’t include all the stimulus money that has been injected into the economy, nor does it include any of the more than $3 trillion being proposed for infrastructure and other programs.
Te issue with the debt really centers around the debt as a percentage of our gross domestic product. For the longest time, most economists have said that anything more than 100% of GDP is unsustainable. Well, we hit 100% sometime mid- year 2012 and have reached 127.3% as of first quarter 2021. Need I say more?
In addition, supply chain issues are creating shortages and price inflation on almost everything we buy and consume. Federal Reserve Chairman Jerome Powell stated recently that he believes this is temporary and as our economy opens more and more people get back to work, supplies will increase
and prices will stabilize or even come down. Tat may be true, but will it occur fast enough to influence the voters in 2022?
I think the biggest question here surrounds the labor force. Everyone is looking to hire, but applicants aren’t to be found. We need to get back to work manufacturing, importing, exporting, transporting, warehousing and selling goods and services that we all need and use every day. With an unemployment rate hovering around 6%, you would think there would be ample numbers of people available to ramp back up. Interestingly though, our labor participation rate is 1.7% lower than it was in February 2020, now sitting at 61.6%. Between 1948 and 2021, the range has been a high of 67.3% to a low of 58.1%. Unfortunately, we currently sit in the lower one-third of that range. To
entice people back to work, employers are increasing wages, putting more pressure on prices.
Tere is much more with respect to the economy, but the important thing regarding the midterm elections is that people will vote their pocketbooks! If inflation and scarcity persist, voters will likely rebel, and that will work to the advantage of the Republicans.
It will be interesting to see if my crystal ball is accurate. My guess is that it is because history tends to repeat itself, and we’ve seen this scenario before. Hang on … it’s going to be an interesting year!
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