The belief of those who should know better is that the American economy is humming right along. This Kafkaesque piece of fiction demonstrates the widespread confusion concerning the economy and the gross domestic product (GDP). To be clear, the GDP consists of the value of all the goods and services produced annually in America. That has nothing to do with scoring the economy. It is merely the size of the pie.
The economy, on the other hand, is evaluated not by size, but by price stability, low inflation and the equitable distribution of all goods and services among the people of the nation. By that last measure, the America economy fails because of the enormous inequity of both income and wealth which has been allowed to accrue. Last September the Census Bureau reported 39.7 million people were poor in 2017, while 95 million lived desperately close to poverty. That is a total of 135 million who live in constant deprivation — almost half of the nation. During the past 30 years, the top one percent have gained about $20 trillion in wealth while the bottom half has lost a trillion. In spite of a big GDP, Americans are poor.
The current euphoria over our chimeric GDP growth is a sugar high based on the pure sucrose of debt instead of the protein of productivity. The deleterious tax cuts were funded by nearly $2 trillion of debt while the ill-conceived tariffs savage broad swaths of the economy. The growth in GDP has thus occurred in spite of this administration's policies and is mostly due to the Fed's questionable handling of the interest rate. What is more, the stomach-churning levels of debt among American corporations is an even greater sugar high added to the mix.
In addition, consumer debt totaled $3.898 trillion in 2018, a 7.6% increase over 2017. Our household wealth is the worst in the OECD, while household debt is over 109% of income and our savings rate is a scant 6.9%. Credit card debt is now at an all-time high of one $trillion, the same as student loans. Moreover, our permanent war economy wastes trillions on unproductive spending which could go to productive areas such as infrastructure, education and health care. Now the Fed intends to cut interest rates even further and add copious more tons of sugar.
America is a nation of three year-olds let loose in a candy store and sickening ourselves with the sugar addiction which is now the norm. The withdrawal is going to be very painful.