University of Chicago professor Austan Goolsbee has an optimistic take on the state of the U.S. economy: “It could be a lot worse.”
“I’m a total optimist,” he said. “I don’t think you can look at the data and not be positive for the U.S.”
The former chairman of the President’s Council of Economic Advisers for the Obama Administration was one of the speakers at the annual Restaurant Finance & Development Conference in Las Vegas Nov. 14.
On whether there’s a recession coming up—it’s complicated.
Some economists would say a recession is the result of two negative quarters of growth—which the United States saw this year—but economists are notoriously bad at predicting recessions, “including predicting recessions that have already happened,” Goolsbee said. “So don’t necessarily just rely on economists” to determine if a recession is in the midst.
The country has suffered 14 recessions on record, most of which are a result of the Federal Reserve raising interest prices faster than the economy can handle. The others were a result of asset prices declining (often referred to as a “bubble” popping) and oil prices.
“It’s always hard to tell we’re in a bubble when it’s happening,” Goolsbee said.
The Covid-19 pandemic brought on what Gooslbee calls an economic downturn, rather than a recession, due to the
One of the biggest problems the economy is facing currently is a struggling labor market brought on by the pandemic. Goolsbee says that’s because of two things: a lack of immigration into the country and the impacts of coronavirus infections, whether it be death or long COVID.
He’s heard from business people who “believe this is a labor market we literally have never seen.”
More and more people are also starting their own businesses or working in the gig economy rather than working for an existing company, Goolsbee said.
“It’s not that they don’t want to work. It’s that they don’t want to come work for you,” he said.
In regards to folks seeing the last two years as the new normal for the economy, Goolsbee isn’t so sure. He can’t see a century-long trend reversing in just two years.
In 1900, the Dow was around 50. In 2022, it’s surpassed 33,000. Despite the many recessions and other major problems the country—and world—have faced, it still grew significantly.
If someone went back in time to 1900 to tell someone about all the bad things the world would face—“We have World War I and World War II, flu pandemics and COVID pandemics, hyperinflation, Justin Bieber, and every other thing that’s gonna go wrong”—no one would anticipate the economic growth the United States has experienced.
The Dow hitting 33,000 would be unthinkable considering all the turmoil the world faced in a century. Human innovation and resilience stood the test of time, he said.
“And nothing’s changed about that through the two years of COVID,” Goolsbee said. “The American economy is built to take new ideas and put them in business and actually make money and make earnings for people. That’s what made us the richest country in the world.”