What I read this week...
And what the White House should have said about the economy
Rather than parse words and nitpick definitions, here’s the honest truth I think the White House should have told about the economy this week…
This week the BEA released the Q2 GDP print. But dictionary definitions of a recession aside, and regardless of the numbers, the fact is that Americans are facing tough times with higher prices from groceries to gas.
That said, I believe the underlying numbers, and the steps we are taking to help the economy, actually tell a very different story.
First, we must understand how we got here. In 2020, we had a black swan event in Covid-19, and in response, we printed trillions of dollars to stimulate an economy that had been effectively shut down.
As a result of the stimulus, the economy actually appeared quite strong, particularly over the course of 2021, when in reality we inadvertently distorted the economy’s true supply-demand equilibrium. Supply was out of whack from Covid shutdowns, demand was propped up by stimulus checks, and inflation went through the roof.
Only recently has the Fed tried to bring all of this back into check by raising interest rates to quell demand and initiating quantitative tightening. Some are saying this will hurt the economy instead of help it, but I believe these actions are necessary to bring inflation into check.
In the end, it really doesn’t matter what we call the state of our economy – whether we are in a recession or not. What matters is that the country is largely headed in the right direction. Employment numbers are good, wages are increasing, savings are robust, and as the free money cycles out of the system, we’ll see labor participation increase too.
The bad news is that both the Democrats and Republicans will try to use this GDP print to gain political ground. But I hope Americans will not be distracted by political posturing and media headlines. Congress and the Fed need to remain focused on doing what’s right for American families by advancing the best policies to grow our economy and restore American global leadership.
Instead, the White House essentially did the opposite. Their focus was a full court press playing with the dictionary definition of the word recession.
I tweeted why this was pointless and counterproductive. And in doing so, I worry that the Democrats lose more votes than they gain, and miss an opportunity to lead America out of this mess.
What I read this week…
Democrats prepare to unleash hell on Fed Chair Powell for the coming recession (ZeroHedge)
Democrats are drafting a proposal to ban congressional stock trades (Bloomberg)
America needs supply-side reform (Slow Boring)
Why doesn't the Fed just hike 200bp all at once? (Noahpinion)
Walmart’s slashed profit outlook sends warning about state of the American consumer (CNBC)
Changes to Shopify’s team (Letter from Tobi Lutke)
Mark Zuckerberg braces Meta employees for 'intense period' (The Verge)
Travis Kalanick's right-hand man tells the story of the coup that brought them down (Newcomer)
Congo to auction land to oil companies: ‘Our priority is not to save the planet’ (NYT)
Medical education goes woke (WSJ Editorial Board)
On Twitter…
Can you read about IPOF ?
It cracks me up that it initially shows 16 comments when there's only 5. Can't wait until next week when we can see if money is being spent towards IPOF/IPOD or if you really wasted a ton of time vacationing over in Italy this year. Deals are getting done but you're going to try to pin this on the economy instead of doing your job and getting a DA for your SPACs. It isn't that no one wants to deal, they just don't want to deal with you. Dissolution will just prove that the SPAC king was really just a WACK Meme.