AMAC Exclusive – By Seamus Brennan
After a historically underwhelming year for the American economy in 2022 that included record-high inflation and declining real wages, some in the media have predicted that growth and recovery are right around the corner. However, Casey Mulligan, a Professor of Economics at the University of Chicago and the former chief economist for the Council of Economic Advisers in the Trump White House, suggested that as long as the Biden administration keeps in place its slate of inflationary policies, Americans can expect the year ahead to be “mediocre” at best and devoid of significant economic growth.
Although there’s “plenty of room to bounce back to where we used to be” prior to the pandemic, there are “a lot of bad policies that are going to prevent a vigorous recovery,” Mulligan told AMAC Newsline. These Biden policies, Mulligan said, are “holding us back from our potential” and prolonging poor economic growth. A “2 or 2.5 percent growth rate from before COVID,” Mulligan said, is “where we should be.” But barring a major shift toward pro-growth policies like those championed during the Trump years, “we’re not going to be able to get back there,” Mulligan said flatly.
Despite all the talk of a looming recession in the coming months, Mulligan said that we’ve already seen one, and could perhaps still be in one now—citing last year’s two consecutive quarters of negative GDP growth, which is the textbook definition of a recession.
Further exacerbating the country’s economic struggles is the fact that, during the pandemic and the age of teleworking, “people were out of the office and senior people were not really mentoring the younger people”—a pattern that still has major implications on our economy today. “Now, in various industries, you have young people running the show, and they don’t know what they’re doing,” largely because of incomplete training. This trend, Mulligan said, will lead to a “period of learning” for younger Americans in the workforce, even if they fail to “catch up to where they would have been,” which could further prolong recessionary forces.
“Recessions are usually bad for the younger people,” Mulligan observed. “They need to work just to get going in their career—and they don’t have those connections established yet.” Although senior Americans are usually less reliant on work income than their younger counterparts (mainly due to factors like pension and social security), Mulligan noted, they could also find themselves “in a tough spot” if “the stock market goes down too much.”
Another major obstacle to full economic recovery, Mulligan said, is Biden’s pattern of gargantuan spending bills, which in effect paid Americans not to work. “It’s not the spending per se, but it’s how they spend it, and a lot of times—like under Obama, he was spending it on paying people for not working and paying people for being poor, so naturally, you get less work and more poor people. And that’s why Obama had very little recovery—you had this big recession, and we should have been bouncing back very fast, and we didn’t because Obama was thinking up a dozen new ways to pay people not to work.”
“And that’s one of the headwinds we face,” Mulligan continued. “Biden’s [American Rescue Plan] has some new ways to pay people not to work. Some of them are strongest for—let’s call them young elderly people, people approaching the retirement age. [There are] very generous Biden programs that they can partake in if they don’t work—and we’ve seen that among the young elderly. They’re not working at the rate that they used to.”
In recent weeks and months, Biden administration officials have also been touting the nation’s 50-year-low unemployment rate, which has led some to believe that the economy is in a stronger position than it may appear. But Mulligan insists the unemployment rate is not the best indicator of economic strength. “We also have a low employment rate,” he told AMAC Newsline. “There are two flavors of not working: there’s the unemployed flavor of not working, and there’s the out-of-the-labor-force flavor of not working. I prefer to focus on employment,” he said, “because employment is more of an objective thing.”
Looking ahead to the rest of the year, Mulligan indicated he would be keeping his eye on one key indicator: real wages. “The real wages have been really bad in the past year and a half. That’s an important indicator for people in that it affects them really directly—and I think we’ll want to watch that. I think real wages will grow… they’re not going to grow very vigorously, but they will grow, I think.” Whenever a recession hits, Mulligan said, “there’s a force toward expansion just to getting back to where you were.”
Yet, in spite of any predictions of economic expansion, it remains evident that—until the Biden administration can forego its deeply ingrained habits of exorbitant spending and inflation-inducing policies, the American economy will remain drastically behind where it should be. Therefore, as the Biden team attempts to flaunt its supposed streak of economic successes, the American people should remember what—and who—induced their hardships in the first place.