Last week’s Labor Department report was unquestionably good news. The American economy is soaring. Unemployment is at 3.7 percent, the lowest since 1969. Employers added 134,000 new jobs in September, marking the 96th straight month of growth, which is a record.
An observer might think the economic law of gravity finally had been solved. That isn’t the case, of course. What goes up must eventually come down, at least a little way, if not more. History shows economic expansion is not a perpetual motion machine.
And yet what is happening right now is impressive in many ways. Back in 1969, for instance, a large share of potential young voters was in Vietnam. Had this group been home looking for work, unemployment likely would have been higher.
The same could be said for the early ’50s, when unemployment also fell to below 4 percent. The Korean War took a lot of potential young workers off the rolls back then.
Today’s economy is not buttressed by a large war fought by a non-volunteer military. Significantly, it also includes a large share of women — a segment of the population that was missing during those earlier periods.
This sustained growth surely puts to rest the gloomy forecasts of 50 years ago, when experts predicted a changing economy, and specifically automation, would lead to legions of unemployed workers.
Today, as Carl Tannenbaum, chief economist at Northern Trust, told the Wall Street Journal, the low unemployment rate “shows how resilient and adaptable the American economy is.” Despite massive changes in technology since 1969, the workforce has been able to adapt, re-configure and reorient itself.
Certainly, the tax cuts President Trump championed and Congress passed have fed this surge, putting much more discretionary money into the economy. Some experts now predict continued growth through 2021.
Except, of course, that no one can accurately predict that. And, even if true, one hates to contemplate what happens after 2021.
Good times don’t continue forever. As we’ve said before, now would be a perfect time for Americans to lay up in store for a future downturn. That means getting out of debt, paying off student loans and mortgages and accumulating real wealth.
Unfortunately, the evidence shows this isn’t what people are doing. Figures from the Federal Reserve show consumer debt rose more in August than experts had predicted, according to Bloomberg. Total credit was up $20.1 billion for the month. It now totals more than $1 trillion, including both revolving credit card balances and loans for things such as schooling and cars. That figure does not include real estate loans or home equity loans, which could put homeowners at risk during a severe downturn.
Add all of that in and personal debt, including mortgages, student loans and credit cards, equals $58,51 per citizen.
Nationally, things aren’t any better. The national debt now totals $21.6 trillion. The website usdebtclock.org reports that this equals $117,283 per taxpayer.
That’s a lot of spending based on the hope of having the ability to repay tomorrow. It’s not a good starting point for the holiday season.
None of this should detract from the good times now underway. Today’s economy shines particularly bright in comparison to exactly 10 years ago.
But prosperity doesn’t mean much if it isn’t handled wisely. A nation full of fools and their money eventually translates into great misery when the days of plenty end.