North Carolina was the No. 1 state in the nation for decreasing the unemployment rate in October. Other great news in the recent employment report is that North Carolina had the third largest job gain, behind only California and Texas, much more populous states. Also, compared with October 2017, North Carolina tied for the second largest drop in the unemployment rate at 0.9 percent. Over the same time period, North Carolina had the ninth highest percentage employment increase. North Carolina really is America’s economic miracle over the last six years or so, during which time the state has increased teacher pay by the highest percentage in the nation.
To change subjects, my recent columns have generated quite a bit of discussion online. I’m prompted to provide some clarification of some points. When we compare anything scientifically, we want to compare “apples to apples.” This may sound strange, but in economies, not every year is equal. We have to consider the stage of the economic cycle at the time.
We wouldn’t expect the economy (or the president) to have the same performance in 1934 (during the Great Depression under President Roosevelt) and 1964 (during a great economic expansion under President Johnson). This is why I’ve been warning everyone about the likelihood of a recession. The usual length of an economic expansion is about five years. The United States economy has been expanding since 2009, far beyond that period of time. The fact that we haven’t entered a recession this late during a period of economic expansion means that something unusually special has been happening lately. Deregulation and tax cuts have allowed us to continue to prosper, in spite of having to start paying the price for the “medicine” — printing money and holding interest rates artificially low — used to get us out of the last recession. So, let’s hope something special continues, but be prepared for a recession.
The second clarification is about our national debt, which is an enormous problem, a ticking time bomb that could go off at any time. If the United States runs a budget deficit of $1.3 trillion, as we did in 2011, we will continue to pay for that deficit forever (actually, until we pay down the debt, which no one is forecasting). One trillion, three hundred billion dollars of debt in one year saddles all future years with an extra $65 billion in interest payments (at average interest rates for my lifetime) every year, forever. The $9 trillion of debt during the Obama administration will cost us an extra $450 billion in interest payments, every year, forever.
So, our government starts every year that much deeper in the hole. That’s $450 billion that can’t be spent to help the poor, educate people, or strengthen national defense. This is why one of the first columns I wrote for The Robesonian was entitled, “The National Debt: A Weapon of Mass Destruction.”
When the new administration took office in 2017, the national debt stood at just below $20 trillion. That means, at historically normal interest rates (which we are now approaching), our budget deficit will start off at $1 trillion, just for interest payments alone. Until we decide to get serious about our national budget, any future president is almost guaranteed to start a new fiscal year $1 trillion in the red.
The good news is that we can “grow” ourselves out of this problem if we can put a halt on federal spending. In fiscal year 2019 we will likely receive $3.4 trillion in revenue (which is higher than any year ever, because of the cuts to income tax rates), whereas in 2009 we received $2.1 trillion. If we could hold spending constant at $4.4 trillion, over time, revenue growth will actually exceed that amount. Do we have the will to hold our politician’s accountable for doing so? History says no. We seem to be fine with spending beyond our means now, saddling our children and grandchildren with this debt.