Political conversations have gotten a long way away from the facts, so here is a reality check on the state of the economy.
Currently the economy is doing well. GDP is growing at a rate of 3% per year. There is no evidence of a recession, which occurs if GDP goes down. Current GDP is higher than the Congressional Budget Office’s 2019 prediction for where we would be in 2024.
Inflation is down to 2.2%, close enough to the target rate of 2% that the Fed has started to cut interest rates. The reason for the high interest rates was to reduce inflation, which has happened as expected. The danger of high interest rates is that unemployment will rise. While unemployment is up slightly from a year ago, it is still as only 4.1%, which is well below the average long-term unemployment rate of 5.7% (since 1950).
The narrative that the the economy is doing badly has led to proposed policies that would actually harm the economy. Tax cuts would cause inflation and add to the government deficit. Tariffs would hurt economic growth and increase prices paid by U.S. consumers; proposed tariffs would cost $2,600 per household. Tax credits for first-time home buyers would likely be eaten up by higher home prices. The only way to reduce the price of housing is to build more; here the barrier is local policy rather than federal policy. One of the barriers to growth of the U.S. economy is a limited supply of workers; limiting immigration only makes this problem worse.
Many people believe the economy is doing badly, possibly because we have high income inequality and therefore many households are struggling. A good way to help these households is to increase the minimum wage.
Joyce Burnette
Crawfordsville