Tag Archives: Economic recovery

Red States Chart Faster Economic Recovery Than Blue States, By Nicholas Dolinger

Imagine that. From Nicholas Dolinger at The Epoch Times via zerohedge.com:

Throughout the United States, an unmistakable pattern has emerged in economic recovery from the lingering effects of the Covid-19 pandemic: Conservative-leaning states have seen rapid and major economic growth, while the coastal economic powerhouses in the Northeast and West Coast have often lagged behind or stagnated.

The skyline of Miami, Florida, on Sept. 29, 2021. (Joe Raedle/Getty Images)

A recent analysis by Moody’s Analytics attests to this pattern, using a combination of 13 metrics to chart each state’s progress toward normalcy. A majority of the best-performing states were found to have Republican governments, while 8 out of the 10 worst performers were governed by Democrats.

The impacts on local and state economies are already starting to be felt. Last May, Florida Gov. Ron DeSantis announced that his state had closed out at $20 billion for the most recent fiscal year, a record surplus that reflects the influx of capital into the state.

Another driver of the economic success of the red states has been the combination of astronomical real estate and rent prices in states like California and New York and new work-from-home opportunities, incentivizing workers to move away from the most expensive cities and seek more affordable housing elsewhere, where they can continue to work at jobs based in those cities.

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Inflation Is Killing The Recovery, by Daniel Lacalle

Sooner or later people figure out that inflation keeps up with or surpasses their inflation-boosted incomes. From Daniel Lacalle at dlacalle.com:

This week, Ned Davis Research published a note titled “turns out, growth looks like it was transitory – inflation is more sticky”. There are many factors that show us that consumers and salaries are being eaten away by inflation, leading to an abrupt halt in the recovery. Autos and new home sales plunged, real disposable personal income has plummeted, and real median wage growth is lower than inflation.

Policymakers have pushed inflation at any cost with the most aggressive monetary policy in decades and it took a normal recovery after the re-opening to prove why inflation is always a monetary phenomenon: In 2020 G7 central banks increased money supply well above demand and faster than ever since 2009. This led to massive inflation spikes in essential goods and services. The rhetoric of “transitory” inflation and “supply chain disruptions” has been rapidly debunked. We have seen three CPI (consumer price index) prints after the so-called base effect ended and prices continued to rise. Furthermore, the price of commodities where there is overcapacity has risen as fast as others. Inflation is always more money chasing scarce assets and that is the reason why we see shipping or aluminium rise to all-time highs when there is ample capacity in the segment, even excessive capacity.

Monetary history shows that policymakers always resort to the same excuses when it comes to printing money and monetary mismanagement: First, say there is no inflation, second, say it is transitory, third, blame businesses, fourth, blame consumers for overspending, and finally present themselves as the “solution” with price controls, which ultimately devastates the economy.

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The United States Will Not Recover Raising Taxes Or Printing Money, by Daniel Lacalle

Here’s a hint to what economic recovery will recovery: less government, not more. From Daniel Lacalle at dlacalle.com:

The dramatic economic decline due to the Covid-19 crisis and the unprecedented recovery spending plans approved by President Trump will drive the fiscal 2020 United States budget deficit to a record $3.8 trillion, or 18.7% of U.S. gross domestic product, according to the Committee for a Responsible Federal Budget (CRFB). According to the same estimates, the fiscal 2021 deficit would reach $2.1 trillion in 2021, and average $1.3 trillion through 2025 as the economy recovers from the impact of the forced shutdowns.

To finance this staggering fiscal effort, the Democratic Party leader, Joe Biden, is announcing a massive tax hike that will neither help the economy nor reduce the deficit.

The solution to the United States budget deficit is not more taxes. Even in the most optimistic receipt scenario, there is no tax hike program that would even start to address the structural deficit, estimated at one trillion dollars a year, even less with the above-mentioned estimates.

More taxes will hurt the recovery, damage the job improvement potential, and reduce investment in the economy. More taxes mean less growth and no deficit improvement.

The Obama administration learnt this lesson quickly, and extended the Bush tax cuts in 2020, adding a new tax cut in 2013. Other United States misguided tax hikes in 2013 did nothing to reduce the debt and kept the economic and job growth below potential.

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