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Getting the national debt under control is a matter of faster growth and spending restraint. We’re nailing the first part but we’re not even attempting the second

Fed chairman: Economy so strong, it’s almost ‘too good to be true’

By Dan Calabrese ——--October 3, 2018

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No, this is not one of those things where some media type or establishment politician tries to convince us that the prosperity we’re seeing is all an illusion and it’s sure to come crashing down at any moment. When Jerome Powell says it almost seems too good to be true, what he actually means is that we’ve seen such a positive collection of indicators so rarely it’s hard to believe.
But it’s real, and the Fed’s projections for the next couple of years reflect those phenomenal fundamentals:
Federal Reserve Chair Jerome H. Powell said Tuesday the U.S. economy appears to be in the midst of a “remarkably positive” period that is unprecedented in modern history. The Fed is predicting unemployment will remain below 4 percent through 2020 and that inflation will stay low — around 2 percent — during that time. This has never happened before in modern U.S. history. The last time unemployment was that low for several years, in the 1960s, it triggered high inflation, but the central bank and many outside forecasters don’t believe that will occur this time. “This historically rare pairing of steady, low inflation and very low unemployment is a testament to the fact we remain in extraordinary times,” Powell said in a speech at the annual meeting of the National Association for Business Economics. “I was asked at last week’s news conference whether these forecasts are too good to be true — a reasonable question.”
President Trump has taken credit for the strong U.S. economy, going as far as to call it the “greatest economy in the history of our country.” Powell has been careful not to wade into discussions of who deserves credit for the economy since the Fed is an independent body, but he did say last week that the tax cuts have played a role in boosting growth.
You know it had to pain the Washington Post to write those words. They certain don’t jibe with the Post’s preferred narrative – the one they’re pushing via Bob Woodward – of a White House in total chaos and unable to do even the simplest things right. Now honestly, some of what Powell is predicting here, I find hard to believe. Unemployment below 4 percent for the next two years? When has that ever happened? The mere return to the workforce of a few percentage points worth of people would seem to render that untenable. And that wouldn’t be a bad thing, since it would mean more people are trying to be productive. But it would surely push the U3 unemployment rate at least closer to 5 percent, which is still considered full employment by most economists. Continued low inflation is easier to accept because it’s really just a matter of responsible monetary policy. Growth doesn’t always have to trigger inflation, and it’s much less likely to do so if it’s spurred by real value-driven wealth creation.

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My biggest concern with the economy is that the spike in federal revenues we’ll get from sustained 4 percent growth will inspire a spending blowout by Congress. That will seem sustainable as long as growth is brisk, but it’s going to slow down at some point, and that’s when we’ll start to see deficits spiraling out of control again. Getting the national debt under control is a matter of faster growth and spending restraint. We’re nailing the first part but we’re not even attempting the second. That’s why I think the nation remains in fiscal peril. You can achieve stronger sustained growth with the right policies, but there will still be some ebbs and flows. And eventually we’re going to have another Democratic president who wants to raise taxes and beat up the business sector again. That’s when you’ll see growth skid to a halt – while spending continues through the roof. We’re already at $21 trillion in debt and we can’t afford another decade of doubling it like the one we just had. But for now, it obviously helps that the economic fundamentals are looking so strong for the next couple of years – unless your name is Kamala Harris, Cory Booker, Elizabeth Warren or anyone else who thinks they can take Donald Trump’s job away from him. That’s not going to happen if things stay this good.
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Dan Calabrese——

Dan Calabrese’s column is distributed by HermanCain.com, which can be found at HermanCain

Follow all of Dan’s work, including his series of Christian spiritual warfare novels, by liking his page on Facebook.

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