Economists pushing the narrative that Real GDP growth will climb back to mid-single-digit percentages in 2022 have got it wrong. The combination of persistent price inflation and weak labor participation will ensure that Real GDP remains range bound between zero and 2%. The sooner Wall Street pundits learn to say “Stagflation” the more honest conversation we can have about remedies for structural unemployment and productivity (hint: job training is the answer, not more helicopter money/fiscal stimulus).

• The Atlanta Fed’s GDPNow estimate for Q3 Real GDP growth is an anemic 1.3% as of Friday October 8th. Wall Street Economists and Government officials from the Fed and Treasury say that supply constraints and COVID variations are entirely responsible for slowing Real GDP. None give credit to price inflation as a reason why consumer confidence is low. Middle class America is feeling the inflation tax in a significant way and will curb spending on non-essential items so long as prices remain elevated. There is no such thing as robust economic growth without America’s middle class powering the economy.
• Labor Participation remains weak and declined from a month earlier. The civilian labor force participation rate ticked down to 61.6% in September, down from 61.7% in August. This is not indicative of a highly productive economy.

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