Oh I understand what is happening very clearly. It is those who keep saying “pay more.” That are causing a contraction in the economy yet to be fully realized.
Businesses shutting down due to lack of staffing
Wage demands inconsistent with the skill levels
Retailers cutting hours of operation heading into peak holiday season
Yeah...there’s nothing to see here other than low pay? Keep it up and there won’t be any jobs and 20% interest rates. Nobody is paying attention to history.
1970s
From November 1973, the economy contracted until March 1975, but it was relatively mild. The economy shrank by 0.5% in 1974 and by 0.2% in 1975.
President Richard Nixon fought back hard. He authorized wage-price controls, which kept prices and salaries too high. Consumers cut back on demand. Businesses laid off workers. Second, Nixon removed the United States dollar from the gold standard, which created inflation. The price of gold skyrocketed to $120 per ounce, and the dollar’s value plummeted. His destructive policies created stagflation and three consecutive quarters of contraction
1980s
The 1980 recession was the third-worst economic contraction in U.S. history. It was tough to beat, because there was also double-digit inflation. A contraction with inflation is called “stagflation.” That was due to President Nixon’s economic policies. The Fed raised interest rates to 20% to combat inflation. That hammered business spending and created the contraction.
It began in January 1980. It seemed like it was over in six months. In 1981, President Ronald Reagan took office. The Fed began lowering interest rates since inflation was at normal levels. But the contraction returned in July 1981 and lasted until November 1982. The economy contracted for six of the 12 quarters. That sent GDP down 0.3% in 1980 and 1.8% in 1982.
Unemployment increased to a record 10.8% in November 1982. It stayed above 10% for 10 months.
Reagan lowered the top income tax rate from 70% to 28%. He also reduced the corporate tax rate from 48% to 34%. Although he promised to reduce government spending, he doubled spending instead. His expansionary fiscal policies ended the recession.
Reagan got the contraction to end and the Democrats think their plan can avoid it too. Except...they plan to raise taxes which shouldn’t be done. They keep heading down this path and it will throw everything into a spiral. People demanding undeserved high wages is like Nixon’s wage-price control policy.
Yeah, we are so far in over our heads, basic economics means nothing. You need to up your level a bit and step back from the wages argument to see the bigger picture unfolding in front of us.