Many economists anticipate that our economy will see its most significant growth this year since 1984.
This sounds like fantastic news until one major factor is considered; the trillions of dollars that have been created out of thin air over the past twelve months.
How could one not expect our financial numbers this year to display this story?
There are those economists that boast about our growing GDP numbers that may exceed the 7% range this year.
But with the federal government spending more than it is collecting, one must wonder how this short-term outlook is being seen as sustainable.
Joseph LaVorgna, chief economist for the Americas at Natixis, believes not, as he expressed in a recent interview with CNBC.
“I don’t see growth as being particularly durable. The economy is going to slow a lot more next year than people think and probably will be well under 3%.”
Many factors are supporting his feelings (and ours) towards this cool-off.
And it’s not just the trillions in stimulus and direct payments that have skewed consumer spending and imports.
We also have the upcoming promised tax rate hike for Americans making over $400k annually, alongside the corporate tax increase.
President Biden’s pursuit of addressing climate issues may affect the backbone of our country, and small businesses, through increased regulatory burdens.
“How 2022 unfolds with respect to Congress is going to be a significant inhibitor to long-term business planning and decision-making, at least to the extent that you’re not going to get a robust set of capital expenditure plans in place,” LaVorgna stated.
“At this point, I don’t see businesses making a big longer-term commitment either to factory build-outs or anything that would have a long shelf life, because you’re not sure what the regulatory and tax environment looks like.”
Chief U.S. economist at TS Lombard, Steve Blitz, believes that the Fed is the one standing in their own way.
“The biggest risk to the expansion is the Fed… The puppet master is trying to control a puppet that they do not have control over.”
We are only halfway through the fiscal year and the government is already running a $1.7 trillion budget deficit as the total national debt recently passed the $28 trillion level.
The public share of that debt is around $22 trillion, or 102% of GDP.
We are not claiming to be fortune-tellers. However, if the saying “history repeats itself” is true, well, historically, now could be a great time to buy gold.