The US economy is booming. Or that is what the headline gross domestic product (GDP) data for the fourth quarter should convey to the American people. Everyone thinks the fat lady of the soft landing is singing, from President Joe Biden to Treasury Secretary Janet Yellen to the financial markets. As is typically the case with government data, however, digging deeper exposes something rotten at the heart of the numbers.
The Bureau of Economic Analysis (BEA) published an advanced estimate of the fourth-quarter GDP. The federal agency reported that the US economy expanded 3.3% in the final three months of 2023, down from the 4.9% print in the third quarter and higher than economists’ expectations of 2%. Last year, the economy grew 2.5%, up from 1.9% in 2022. Is this impressive? At first glance, it is exceptional and worthy of applause a la Orson Welles in Citizen Kane, considering an environment of above-trend inflation and surging borrowing costs. But the devil is, as ever, in the detail.
What were the notable components of growth? Personal consumption expenditures popped 2.8%, gross private domestic investment edged up 2.1%, exports soared 6.3%, imports swelled 1.9%, and government spending rose 3.3%. That’s right, shopping-addicted consumers were outpaced by elected drunken sailors.
And then, how much did these contribute to the final GDP reading? Here is a breakdown: personal consumption expenditures (1.91%), gross private domestic investment (0.38%), net exports (0.43%), and federal, state, and local government spending (0.6%). After calculating the numbers and carrying the one, it is seen that consumer spending accounted for about 57% of economic growth, while government consumption represented roughly one-fifth of the October-December expansion.
These statistics convey two things. First, the US economy is borrowing its way to prosperity. Second, the economic landscape is heavily dependent on the government.
(Photo by Drew Angerer/Getty Images
Consumers are drowning in a sea of red ink as total household debt exceeds $17 trillion, including nearly $1.1 trillion in credit card debt. But the Leviathan is comparable to the famous elevator blood scene in The Shining as it ran a budget deficit of half a trillion dollars and added approximately $830 billion to the national debt to close the year. As one account wrote on X: “The best GDP report a half a trillion-dollar deficit in one quarter can buy!”
Imagine this, if you will. John Smith checks the mail or his email inbox and finds last month’s credit card statement. He opens it and runs to his wife, Jane Smith, to tell her the Visa or American Express is maxed out. Johnny jumps for joy and informs her how wealthy the family is because it has so much stuff from inserting, swiping, and tapping with money the household does not have. This is how the economy is currently functioning.
Observing a government-supported economy is not isolated only to the GDP statistics. As Liberty Nation has reported, the monthly jobs report from the Bureau of Labor Statistics (BLS) has highlighted the state as being one of the top job creators in the country. Last year, the government accounted for one-quarter of all new employment. Additionally, when other sectors dependent on Washington are inserted into the equation, it could be estimated that more than a third or nearly half of all job creation in 2023 was government-related.
The current administration can claim that it has a stellar track record. But if presidents, governors, and mayors add bodies to their payrolls, anyone can champion a stellar labor record.
“Let them dig holes in the ground,” said Keynesian economist John Maynard Keynes during the Great Depression. “The government should pay people to dig holes in the ground and then fill them up.” What might have been a joke transformed into the basis of public policymaking during downturns. Deficit-financed emergency stimulus and relief efforts had been reserved for recessions. However, even throughout expansionary periods, governments have embraced this model, too, as is evident in the treasure trove of GDP and labor data.
Perhaps President Biden truly believes what his father told him – and it may have been the only thing since this is what he tells audiences in many of his speeches – a job is more than just a paycheck. It’s about dignity. Bidenomics informs us that the new way to grow the economy is perpetually digging holes in the ground and refilling them to generate growth and keep people employed while further confiscating resources from the more productive private sector.