TURES COLUMN: So How Bad…Or Good …. Is The Economy?

Published 10:30 am Thursday, November 10, 2022

The United States got some fortunate news about the economy as the recession of 2022. But how strong is the overall economic picture? How bad is inflation compared to other countries? What’s to blame for it? And what might the coming years look like for our businesses?

“Gross domestic product rose 2.6% in the third quarter versus the estimate of 2.3%,” wrote Jeff Cox from CNBC at the end of October. This was reported by the Bureau of Economic Analysis, covering July to September of 2022. 

In fact, the graph from the Federal Reserve Economic Data showed growth from 2021 greatly exceeded that of 2018 and 2019, while the historic 30% decline in 2020 left America in a big hole. Luckily, the post-pandemic recovery helped regain those losses from 2020.

The good news boosted the numbers from Wall Street for that time. The weekly jobless claim was up 217,000, but still below the 220,000 estimate. Overall “Hiring regains jobs lost since ‘20” reported the Wall Street Journal in their August 6-7, 2022, edition.

So the economy has recovered from the recession; NBER didn’t declare the first six months of 2022 a recession, but that’s their usual definition, so I’m using it. And the jobs lost from the economy in 2020 are all back. 

That leaves inflation, which at 8.3 percent is higher than usual.

So what’s causing inflation? If Republicans are right, then America should have a much higher inflation rate than other countries. If Democrats are right, and it has to do with supply chain issues related to the persistence of the pandemic, then other countries can expect to also have higher inflation rates. I analyze Inflation Data to see.

Clearly America isn’t like other failed states like Sudan, Venezuela and Lebanon, whose inflation rates exceed 200%. But Turkey (in some first-world organizations) faces 69.97% and Argentina, one of the leading South American economies, is suffering under 58% inflation. Those who fawn over Vladimir Putin would do well to know that Russia’s inflation is 17.8%.

Nearly 20 European countries have double-digit inflation. In fact, the European Union average is 8.1%, just barely below America’s inflation level, and the United Kingdom’s inflation is running at 9% after years of British Conservative Party leadership. Now some countries are fortunate to have lower inflation rates, including Italy (6%), Norway (5.4%), France (4%), and Switzerland (2.5%). Some tiny countries like Liechtenstein, Faroe Islands and Malta also make the list.

What the evidence shows is that no, Joe Biden has not single-handed jacked up inflation in America, or in the world for that matter. America’s economy is impressive but not strong enough to affect the monetary and fiscal policies of nearly 200 countries. Given how many other first world countries are experiencing the same thing as the U.S., the supply chain explanation is the superior one to “It’s all Biden’s fault.” 

And it’s important to note that Japan’s and the Swiss’ lower inflation rates is what’s being pursued by the Federal Reserve, though pushing down inflation too fast could risk another recession.  It’s an important factor to keep in mind as America determines the next steps in recovering from the devastating economic downturn of 2020.