Time for the Roaring Twenties?
The stock market is at record highs. More than 900,000 Americans found jobs in March. Flapper models sashay down the runways of Paris and Milan. In a moment of weakness, even I turned my head at a “For Sale” classic Mercedes convertible (the last and only car I’ve ever owned was a Honda Civic which I clung to for more than 20 years).
Are we headed for another Roaring Twenties? Here are the facts today.
While 916,000 people found jobs in March, are times really booming? When an economy is truly growing, jobs that didn’t exist are created. But today’s employment numbers mostly reflect jobs that have been restored after being lost during the pandemic. The data bears this out. The biggest job gainers in March were in leisure and hospitality at 280,000 — more than two-thirds in restaurants and bars. As schools re-open, another big gainer was education at 190,000. These jobs aren’t new jobs – just jobs coming back.
The number of unemployed people is now at 9.7 million — 4 million more than February 2020 before the pandemic according to the Bureau of Labor Statistics. Many of the unemployed aren’t exactly pounding the pavement looking for jobs, thanks to the federal government’s generous stimulus checks. Even worse, the damage done to the economy by the shutdowns – especially to small businesses – means that some jobs will never come back.
The V-Shaped Recovery
Forecasts for growth in the first quarter call for a GDP as high as 10 percent. Personal income has already surged 10 percent. Household wealth has increased to nearly $2 trillion. But “too much of a good thing is often just too much,” economist Edward Yardeni wrote in his daily note. “The economy is hot and will get hotter with the bonfire of the fiscal and monetary insanities.”
Today, the national debt stands at $28 trillion – that’s $85,200 for every American. Counted in that debt is a Covid-19 relief package that topped $6 trillion and the Fed’s $2.3 trillion lending to support households, businesses, the financial markets and state and local governments, not to mention a near-zero interest rate policy. The fact is, it’s the exploding national debt that’s paying for the economic party, covering up the reality that the U.S. is not getting stronger but actually growing weaker by the day under the weight of its debt.
A truly growing economy creates jobs, pays down debt, and adds value by producing goods and services. The U.S. is restoring lost jobs, expanding its debt, and importing a massive amount of goods and services from abroad.
Looking back on the “Great American Prosperity”, it was J. Paul Getty who admitted that the Roaring Twenties was “built on shaky foundations.” A century later, our “roaring economic recovery” is built on mountain of debt.
Rowena Itchon is senior vice president of the Pacific Research Institute.