I was blessed to be interviewed by David Francis last week for a piece published today by U.S. News and World Report. In his article, Francis asks "Is the Economic Recovery Real?" Francis quotes myself and Ron Weiner, founder and president of RDM Financial Group.
Francis accurately communicates my views on the question. I stressed that the financial and economic meltdown of 2008 was due to massive capital malinvestment, so any apparent economic recovery that is the result of government fiscal or monetary stimulus is unsustainable.
Readers should note, however, that the article states Grove City College is south of Pittsburgh when it is actually 58 miles north of Pittsburgh. Additionally, at one point I am quoted as saying, "My concern is the stimulus seems to be what is needed to keep unemployment from being really bad." That statement should not be taken to mean that I am in favor of government stimulus to keep the unemployment rate down. The statement was in the context of what would happen to unemployment if we allowed the market adjustment process to run its natural course.
I suggested that without government intervention it is likely that in the short-run the unemployment rate would jump higher until the necessary adjustments took place so that entrepreneurs could get an accurate lay of the economic land. Only then would they be able to make better decisions putting us back on the road to prosperity. My concern is that the lower unemployment rate is not due to real improvement in the economy due to increases in truly productive activity, but is, in fact, more due to government stimulus.