David Stockman, in his article on InternationalMan.com, critically examines the validity of the “strong economy” narrative in theU.S., focusing on misleading labor statistics reported by the Bureau of Labor Statistics (BLS). He notes that despite the apparent rise in job numbers, particularly in the Leisure & Hospitality (L&H) sector, these jobs often fail to match the quality and compensation of those in the goods-producing industries. Since 1978, the goods-producing industry has seen an 18% decline in hours worked, while L&H jobs have increased by 128%. However, these L&H jobs primarily consist of part-time positions paying an average of $24,400 annually—just 37% of the $66,000 for goods-producing jobs. Such a disparity indicates a troubling replacement of higher-quality jobs with lower-paying work, reflecting a broader trend of declining economic productivity and output.
Stockman further criticizes the systemic biases in the data compiled by the BLS, which he argues are rooted in Keynesian economic frameworks. These frameworks have historically equated economic output and job counts with what can be measured officially, neglecting significant portions of the economy that exist outside of this structure. Activities like household labor, self-service endeavors, and underground economic activities remain largely unrecorded, meaning that when they transition into the formal economy, they artificially inflate job and output figures without contributing to actual economic growth. For example, the surge in ride-sharing services such as Uber has shifted traditional taxi and limo drivers into a for-hire model, not resulting in any net increase in economic activity but merely a change in job classification.
Examining the migration of employment from unmonetized domestic roles to formal paid jobs, Stockman points out a significant influx of women into the workforce since 1978. The employment rate for prime-aged women rose dramatically as they moved from household duties into various sectors, including health care and hospitality. Yet, this growth in jobs largely reflects a shift rather than true economic expansion, as many of these roles merely represent the monetization of previously uncounted labor. Among the notable gainers, women’s employment in health, private education, and other service sectors has spiked significantly, accounting for a major share of reported job growth over the past several decades, while the actual creation of new economic value remains suspect.
In comparing historical economic metrics, Stockman highlights that present-day growth in federal borrowing and debt levels contrasts sharply with the period of robust growth from 1954 to 1970, during which public debt grew modestly and nominal GDP expanded at a healthy rate. The 1954-1970 period witnessed a 2.2% annual growth in public debt coinciding with a 6.5% nominal GDP increase. By contrast, since Q4 2019, total public and private debt has soared by approximately $25 trillion against a mere $6.8 trillion growth in nominal GDP, indicating unsustainable economic practices. This discrepancy raises red flags about the underlying health of the U.S. economy.
Stockman asserts that the alarming rate of debt accumulation points to a fundamental instability in the financial system, exacerbated by the current administration’s economic policies. He posits that the expansion of debt, driven by central banks, has artificially inflated the economy’s apparent strength, creating an illusion of growth that lacks sustainable foundations. The current metrics discussed are not reflective of true economic health; instead, they signal the onset of potential crises fueled by irresponsible fiscal practices and overreliance on borrowing, debt, and stimulus.
With these insights, Stockman warns that the narrative of economic prosperity is misleading, suggesting that the U.S. is at risk of encountering an economic crisis of unprecedented magnitude. He urges readers to reconsider the purported strength of the economy and be prepared for potential upheaval, thus highlighting the necessity for awareness and preparedness in the face of financial uncertainty. Ultimately, he concludes that the assumption that increased spending and borrowing can lead to lasting economic prosperity is fundamentally flawed, underscoring the precarious position of the economy.