"The air is thick with recession talk, and stocks are cratering. But it just may be a mirage, a refraction of partisan distortions" wrote Ford School professor, Justin Wolfers, in a recent guest essay for The New York Times.
"It started with a projection from the Federal Reserve Bank of Atlanta that the economy is on pace to shrink in the first quarter. You could almost hear people on the left squeal with delight that the data were confirming their concerns about the Trump presidency." However, Wolfers wrote, "The problem is that the GDPNow calculator has been fed the worrying data about a bump in imports," but has not been fed the "more reassuring data" about the strength of the economy.
Many are speculating on who is to blame for the possible recession said Wolfers. He wrote that "Elon Musk seems to have convinced himself that this recession sighting was actually caused by the Department of Government Efficiency," but his wall of receipts only amounts to "0.1 percent of U.S. annual output," showing that "Mr. Musk’s role in the economy is far smaller than he imagines it to be." Other Republicans have blamed former President Joe Biden for the forecasted downturn.
Wolfers offered two reasons to be optimistic, "First, the hard numbers tell us that the economy is in very good shape. Unemployment is low, output is growing, and inflation is down close to normal levels." Then he wrote, "Second, the single best determinant of the future health of the economy is its current health." With our healthy economy he said, "In the absence of solid evidence that the future will be worse, it’s usually best to keep predicting more good health."
Wolfers concluded, "America’s biggest economic threat is the chaos sown by an unpredictable White House. Tariffs are on except when they’re off; DOGE cuts with a chainsaw and keeps hitting arteries; fiscal discipline has gone missing; and rule by executive order has left nearly the entire Trump agenda tied up in court. At the same time, Mr. Trump’s whims are rewiring the postwar world order."
