David Stockman's Take On The Biden-Harris Economy
David Stockman, a renowned economist, has shared his views on the current state of the US economy under the Biden-Harris administration. He argues that the illusion of a "strong" economy is largely based on selective use of data from the Bureau of Labor Statistics (BLS) establishment survey’s monthly “jobs” count.
Stockman points out that the number of hours worked in high-paying, productive sectors has actually decreased by 18% since 1978. This decline, he argues, has been masked by a 128% increase in hours worked in the Leisure & Hospitality (L&H) sector, which is largely made up of bars, restaurants, and other food service operations. However, he notes that these jobs typically pay significantly less than those in goods-producing sectors.
Stockman's Critique of the Keynesian Economic Model
Stockman criticizes the Keynesian economic model, which he believes has led to a bias in the BLS employment data and GDP accounts. He argues that this model overemphasizes the monetized economy, while overlooking significant portions of the non-monetized economy such as household labor and the underground economy.
He explains that when economic activity shifts from the non-monetized to the monetized economy, it is recorded as additional output, jobs, and income in our Keynesian labor and GDP accounts. However, he asserts that in many cases, no new output or income is actually being generated; it’s just being newly recorded.
Stockman provides the example of the rise in the number of US taxi and limo drivers, which more than doubled between 2014 and 2023. He attributes this increase not to actual growth in the sector, but to the rise of ride-hailing services like Uber and Lyft, which led to more people hiring drivers rather than driving themselves.
The Impact of Social Changes on the Economy
Stockman also discusses the impact of social changes on the economy, particularly the increasing participation of women in the workforce. He notes that the employment rate for women aged 25-54 years rose from 56.5% in Q1 1978 to 75.4% in Q2 2024. This shift, he argues, did not represent new output or jobs but merely the monetization of what was already there.
He further points out that the sectors that have seen the most significant growth in female employment are those that are closely related to household work that has become monetized. These include health and private education, leisure & hospitality, and other services.
Stockman's Analysis of the Current State of the US Economy
Stockman argues that the current state of the US economy is not as robust as it appears. He points to the growth of Federal debt since Q4 2019 and nominal GDP as evidence of this. He notes that public debt has grown by 172% of GDP growth, a stark contrast to the period between 1954 and 1970 when public debt grew by only 16% of the gain in nominal GDP.
He also points to the growth of total public and private debt, which has far outpaced the growth of nominal GDP. He argues that the US economy is being artificially inflated by cheap debt from the Federal Reserve and other central banks around the world.
Stockman concludes by reiterating his belief that it is not possible to spend, borrow, and print your way to prosperity, and he asserts that the current state of the US economy under the Biden-Harris administration is a clear demonstration of this.
Bottom Line
Stockman's analysis presents a sobering view of the current state of the US economy. It challenges the prevailing narrative of a strong economy and raises important questions about the sustainability of current economic policies. What are your thoughts on this perspective? Do you agree with Stockman's analysis? Share this article with your friends and discuss these important issues. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.
David Stockman's Take On The Biden-Harris Economy
David Stockman, a renowned economist, has shared his views on the current state of the US economy under the Biden-Harris administration. He argues that the illusion of a "strong" economy is largely based on selective use of data from the Bureau of Labor Statistics (BLS) establishment survey’s monthly “jobs” count.
Stockman points out that the number of hours worked in high-paying, productive sectors has actually decreased by 18% since 1978. This decline, he argues, has been masked by a 128% increase in hours worked in the Leisure & Hospitality (L&H) sector, which is largely made up of bars, restaurants, and other food service operations. However, he notes that these jobs typically pay significantly less than those in goods-producing sectors.
Stockman's Critique of the Keynesian Economic Model
Stockman criticizes the Keynesian economic model, which he believes has led to a bias in the BLS employment data and GDP accounts. He argues that this model overemphasizes the monetized economy, while overlooking significant portions of the non-monetized economy such as household labor and the underground economy.
He explains that when economic activity shifts from the non-monetized to the monetized economy, it is recorded as additional output, jobs, and income in our Keynesian labor and GDP accounts. However, he asserts that in many cases, no new output or income is actually being generated; it’s just being newly recorded.
Stockman provides the example of the rise in the number of US taxi and limo drivers, which more than doubled between 2014 and 2023. He attributes this increase not to actual growth in the sector, but to the rise of ride-hailing services like Uber and Lyft, which led to more people hiring drivers rather than driving themselves.
The Impact of Social Changes on the Economy
Stockman also discusses the impact of social changes on the economy, particularly the increasing participation of women in the workforce. He notes that the employment rate for women aged 25-54 years rose from 56.5% in Q1 1978 to 75.4% in Q2 2024. This shift, he argues, did not represent new output or jobs but merely the monetization of what was already there.
He further points out that the sectors that have seen the most significant growth in female employment are those that are closely related to household work that has become monetized. These include health and private education, leisure & hospitality, and other services.
Stockman's Analysis of the Current State of the US Economy
Stockman argues that the current state of the US economy is not as robust as it appears. He points to the growth of Federal debt since Q4 2019 and nominal GDP as evidence of this. He notes that public debt has grown by 172% of GDP growth, a stark contrast to the period between 1954 and 1970 when public debt grew by only 16% of the gain in nominal GDP.
He also points to the growth of total public and private debt, which has far outpaced the growth of nominal GDP. He argues that the US economy is being artificially inflated by cheap debt from the Federal Reserve and other central banks around the world.
Stockman concludes by reiterating his belief that it is not possible to spend, borrow, and print your way to prosperity, and he asserts that the current state of the US economy under the Biden-Harris administration is a clear demonstration of this.
Bottom Line
Stockman's analysis presents a sobering view of the current state of the US economy. It challenges the prevailing narrative of a strong economy and raises important questions about the sustainability of current economic policies. What are your thoughts on this perspective? Do you agree with Stockman's analysis? Share this article with your friends and discuss these important issues. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.
