NATIONWIDE — Inflation, supply and demand have been causing some economic trouble this year, but one Hoosier economist says overall, things aren’t bad.
“Overall, you gotta be happy,” says Michael Hicks, economist at Ball State University talking to IndyPolitics, “growth rate for third quarter looks to be about 2.6-percent nationally, which is really strong.”
Hicks also points to several other financial factors, including a month-to-month inflation decrease, from about eight-and-a-half percent to six-and-a-half percent. Hicks says the unemployment rate is also at about 3.5-percent, and even some industries that are beginning to have a little trouble, such as the RV industry, are set to do record business this year.
The Federal Reserve would like to see the inflation rate drop to about 2.5-percent, says Hicks. You’ll see Democrats and Republicans blaming one another for the 40-year record high rise in inflation, but Hicks says you can track the origins of inflation to the Trump administration, which continued through the Biden administration.
Hicks explains, “just to go back in history, the Tax Cuts and Jobs Act from the Trump administration cut taxes without paying for them. That’s inflationary, that’s a demand side pressure. We started to see that in 2018 and 2019 as interest rates went up. At the same time, we imposed a huge tariff, which is a tax on American consumers who bought Chinese goods. That was about 300-billion-dollar extra tax that the supply side shot that caused prices to go up. And the spring of 2021, after President Biden took office and the House and Senate were in Democrat hands, they passed another pandemic stimulus that added yet more money to households based on data that suggested the economy was not recovering as robustly.”
Hicks says you combine both actions from each presidency, along with the COVID-19 pandemic and its effect on the unemployment rate, bad luck, and the current war between Russia and Ukraine, it’s been a perfect storm for economic hardship.
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