INDIANAPOLIS–You may have heard the report that the United States is technically out of a recession, and that gross domestic spending has grown after two quarters of negative growth. But, all is not rosy, says University of Indianapolis Economist Dr. Matt Will.
“This quarter was a temporary bump due to government spending and because the Fed got inflation under control to a degree. There’s still some work to do, but to a degree it’s under control,” said Will, a guest on WIBC’s Tony Katz Today.
In other words, according to Will, those spending bills you’ve been hearing about have helped boost the economy.
Will said that’s no cause for celebration.
“The problem is, this causes inflation and this causes future recessions.”
So, Will believes you can look for more trouble in 2023 ans 24, because the economy is in a temporary bump due to the Fed’s actions increasing interest rates and bringing inflation down for now.
The problems are still there, though. And, Will says they manifest in the kind of spending that’s happening.
“Consumer spending is up. But, it’s on services. On goods it’s down. It’s down dramatically on goods,” he said. Will said that when people spend on goods it helps prevent future unemployment.
“You buy that refrigerator, and they have to have a factory and they have to employ a person and they have to mine steel and they have to mine energy and they have to sell it through stores.”
But, if you’re buying something like a plane ticket the effect disappears a whole lot sooner and does not benefit nearly as many people or working parts. Will also said that people are spending, but in many cases they’re spending from their savings and not their income.
He also pointed out that there are still supply chain problems, with more to come, and that inventories are down 20 percent, according to government figures.
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