We are living though more prosperous times than some of you readers have experienced in your lifetimes.
What is particularly good and striking about this time is that the economy is even better later in the economic growth cycle. Usually, the best months of a recovery occur shortly after the recession ended.
Not in this case.
Despite unprecedented efforts by the government to recharge the economy — stimulus package, multiple rounds of quantitative easing (basically, printing money), and artificially low interest rates, these powerful moves were offset by the job killing policies of government regulations and the Affordable Care Act. These efforts allowed the wealthy, but not the working-level folks, to recover, increasing income inequality.
The current good times are also unusual because in most economic cycles, we would have already had the next recession by now. However, instead of recession, the past year or so has helped the poor the most, allowing them finally to go back to work and see their wages grow. Still, we are always in danger of entering the next recession.
North Carolina continues to lead the nation to even greater prosperity. In May, North Carolina created the third highest number of jobs in the country. Even more impressive, North Carolina had the third highest percentage increase in employment in the country.
For the rest of the article, I will list just some of the staggering positive dynamics of the current economy and a few of the danger signs.
— African-American and Hispanic unemployment rates have hit record lows.
— Wage growth is the fastest since January 2009.
— Economic confidence among the lowest third income earners has leaped.
— Gallup found the highest level of satisfaction with the direction of the country in 12 years.
— Small business optimism reached its highest level since 1983.
— Economic growth in the United States is dramatically higher than Europe or Japan. We are doing something right that they aren’t.
— April’s federal tax revenues were the highest ever received (13 percent above 2017).
— State revenues in California, New York, Connecticut, North Carolina and many others are all running ahead of forecast.
As predicted by very few experts, the tax cuts so far are resulting in greater tax receipts. That is exactly the scenario we want. The most worrisome current conditions are:
— We continue to run an enormous federal deficit. Ideally, in good times we should run budget surpluses, not saddling future generations with huge debts.
— The Congregational Budget Office predicts the ACA “Obamacare” will lose $4.8 trillion in the next 10 years.
— The Federal Reserve Bank is taking back (“unwinding”) the trillions of dollars “printed” during the Obama administration.
— The benefits promised far into the future but not funded are now catching up with state governments, for example. Look for Illinois to become insolvent in the not too distant future. Other states (not North Carolina) are also in dire straits.
If we can keep cutting regulation and reducing our deficit spending, we have a chance at continuing the greatest economic conditions in decades and lifting more people out of poverty.
Eric Dent, a former professor at The University of North Carolina at Pembroke, now teaches at Florida Gulf Coast University.