Michigan GDP Grows Slightly As Nation Looks Down The Barrel Of A Recession
August 9, 2022
As the gross domestic product of the nation dropped by 1.6%, Michigan was one of a handful of states that saw a positive gain of 0.1%, according to data from the U.S. Bureau of Economic Analysis.
While economists argue over whether the nation is in a recession, economist Tim Nash, vice president emeritus of Northwood University and director of Northwood’s McNair Center for the Advancement of Free Enterprise and Entrepreneurship, predicted it in March and said the recession is real.
“I’ve always looked at recessions based on negative back-to-back quarters in GDP, and for the 11th time since World War II, we have two negative back-to-back quarters in GDP,” Nash said. “I think we are at the beginning of a recession.”
However, he said this was looking to be a different recession than what Americans have historically seen. The recession doesn’t look to be long and it appears it may be mild because of policy and spending in the federal government.
“I do think the Fed is doing the right thing with regard to interest rates,” he said. “I’d like to see it reduce the Fed balance sheet more than it is right now.”
Other differences he is seeing with the onset of this recession is the disconnect occurring between Wall Street and Main Street and the overall impact of the nation from the COVID-19 pandemic.
“A couple months ago we had about 6 million people unemployed, and about 11.5 million jobs available,” Nash said.
He said those numbers were tightening and the latest numbers showed only 10 million jobs available, and that national unemployment has dropped to 3.5% for the first time in many months.
While the jobs available have declined, the jobs report data showed 500,000 new jobs added. Also, labor force participation dropped by 62.1% as more Baby Boomers went into retirement and birth rate is slowing.
“Simultaneously, when you look at the overall immigration process, it’s more difficult to get employees via the immigration process,” he said.
He said Democrats and Republicans in Washington needed to get together and create a system to tap into talent outside the United States in a sustainable way, in addition to homegrown talent.
Nash also said people being cooped up from COVID-19 is impacting how drastic the recession is being seen. He said people are taking the vacations and buying the items they had put off because of the COVID-19 pandemic, but that could change.
“The next couple of months (are) going to be quite interesting,” he said.
A recent national poll from Monmouth University showed the economy is top of mind for many voters, and Nash said it could have a negative impact on incumbents in November.
He said there are many people who are running up charges on their credit cards and may be in for a rude awakening when they end up having to pay the piper, because the Fed has raised interest rates.
He said those realities could see people turn on sitting politicians who have already low approval ratings from the populace.
“My guess is we’re going to have very high voter turnout and people are going to vote with their pocketbooks,” he said.