LAKELAND – In 2022, companies can expect a 10% to 15% rise in profits as the U.S. economy grows another 4% this year, economist Brian Wesbury predicted on Thursday during his annual forecast in Lakeland.
In his 27 years of forecasting for the Lakeland Chamber of Commerce, this year will be different because the economy is in unprecedented territory, mostly because of several moves made early in the pandemic in Washington, D.C., he told a crowd of several hundred people at the RP Funding Center.
“Unprecedented means never have we done these things, never have we locked down the economy, never have we borrowed $5 trillion from our kids and great-grandkids and grandkids, never had we printed $4 trillion in such a short period of time,” Wesbury said.
He called the recession during March and April 2020 – a time period that coincides with COVID-19 lockdowns – the shortest economic downturn in history, citing data from the Massachusetts-based National Bureau of Economic Research.
He said presidents both Democrat or Republican may take credit for economic recoveries, but this is not true.
“When (President) Joe Biden stands up and says I have presided over the greatest job growth in a recovery in American history, I want to laugh because he had nothing to do with it,” Wesbury said.
“This was a lockdown and a reopening,” he said of the two-month recession and resulting economic recovery in 2021, adding: “There is nothing normal about this business cycle,” between displaying charts and adding to them with a red marker.
Wesbury’s visit came just one day after Biden’s Economic Council director, Brian Deese, announced on Wednesday at a White House press conference, “in 2021, our economy experienced the largest single drop in the unemployment rate on record in the history of the country, down to 3.9%; the most jobs created in any year on record at 6.4 million; the strongest economic growth of any year in nearly four decades."
Regarding inflation, Wesbury explained the Federal Reserve’s monetary policy was to blame, not government spending, as many like to say.
What keeps him up at night is the potential for another lockdown, he said. He added, his predictions for 2022 rely on another lockdown not happening.
Displaying another chart, Wesbury claimed effectively all Americans have either been vaccinated, tested positive for the virus or had it but didn't know it.
“It is so prevalent, it is everywhere,” he said, regarding COVID. “The bottom line is: it’s over.”
Wesbury did not want to predict how 2023 would be because of the unprecedented economic times for the country. Still he said, “2022 is going to be another reasonably good year,” and then predicted an economic growth rate of 4%. He also anticipated 3.5 million jobs would be created this year and a 10% to 15% rise in profits for American companies.
While he did not blame government spending on inflation, Wesbury cautioned against “progressives” that wanted Biden’s Build Back Better program to gain passage in Congress. He countered the proposal saying, in 1930 government non-defense spending represented 2.5% of of the Gross Domestic Product and today it represents 27% of GDP.
"In mathematical terms, what that means is over the past 90 years government has grown 10 times faster than the economy as a whole," he said.
“They have taken more and more and more,” he said of U.S. governments since President Franklin D. Roosevelt, who led the country out of the Great Depression during his term from 1933 until his death in 1945 with New Deal programs.
He called out former Presidents Johnson, Nixon, Ford and Carter as the “four horsemen of the apocalypse” for their approval of additional government-funded entitlement programs and other non-military spending.
If it passes, the Build Back Better program would provide the country’s poor, disabled, elderly and working and middle classes with assistance for education such as free preschool as well as child care with government funding and tax cuts.
The Build Back Better program would also address climate change with rebates and tax credits to assist families switching to renewable energy for their housing and transportation needs as well as creating jobs in renewable energy industries. Expansion in affordable health care would also be a part of the package.
He admitted he would probably never serve on the Federal Reserve because he would put a stop to the printing of cash by the Treasury “cold turkey” rather than the potential tapering of the pandemic recover program by the Fed as the central bank has signaled it will do in 2022.
The Fed wants to address climbing inflation, now at levels unseen for a generation, more aggressively with a series of interest rate hikes and ending its asset-buying program earlier than expected in 2022, according to a Dec. 15 Forbes magazine report.
Wesbury is the chief economist for the investment advisory firm First Trust Advisors L.P. He is a Northwestern University graduate and previously worked for Republican Connie Mack III, who served as a member of the U.S. House of Representatives from Florida from 1983 to 1989 and then as a senator from 1989 to 2001.
The chamber’s Economic Forecast 2022 breakfast was the 35th year the event has been held. The 90-year-old Lakeland-based investment firm, Allen & Company of Florida, LLC, sponsored the event.