Global Fastener News

“The economy is back,” Christopher Thornberg declared to the 2021 joint conference of the Pacific-West Fastener Association and Southwestern Fastener Association. “This economy has momentum.”

Expect 6% growth in Q4 with unemployment below 5%, Dr. Thornberg of Beacon Economics LLC predicted.

And the economy will be hot for the next few years, he added. “Three years? Four years?”

The current economy comes after the tragic natural disaster of the Covid-19 pandemic. “History shows natural disasters have a “limited long-run economic impact,” Thornberg said. “The crisis is gone.”

Fiscal and monetary policy relations to the Covid-19 pandemic “have been excessive.”

The Federal Reserve responded to “over-heal the economy in the short-term” with a “rocket booster,” Thornberg suggested.

Many of the day-to-day “crises” were not real, Thornberg said.  “Miserableness and the pandemic” did not result in Americans “selling apples on the street corner in the snow.”

The U.S. poverty rate actually fell in 2020, he pointed out.

“People are tougher than we think,” Thornberg said.

Speaking to Pac-West and SFA on the topic of “Post-Covid World, Over the Hump … or Over-Stimulated?,” Thornberg cautioned that the overstimulation puts the economy at “the greatest risk of inflation in 50 years.”

There are a “couple really good years in front of us” that could end with recession due to overbuilding and over expansion.

The actual Covid recession was short.

“Typically after a recession, there are fewer jobs so there are workers for low wages,” Thornberg said. “Not this time,” he declared, noting there are 50% more job openings. When applicants “don’t have to take the first job it pulls everybody up.”

Only supply chain disruptions are “holding back” full recovery, Thornberg said.

The supply chain disruptions result from “a lot of things adding up.”  The Just-in-Time model of the past decade meant inventories were down and “nobody was ready for a surge.”  The pandemic caused “bad forecasting in 2020” and there was “excess demand by consumers.”

The global shipping backlog is partially due to “slow capacity growth in recent years.” he said of supply chain problems.   “It will turn. It will catch up.”

Changes coming: There is an upcoming glut in U.S. oil production.  Natural gas prices up?  That raises the cost of steel, Thornberg forewarned.

Thornberg noted that ten million people lost jobs during the pandemic, but 110 million received checks.  The U.S. government was “giving money to people who can’t spend it.”  For every $1 lost in earnings the U.S. government gave out $3.50.

Checking account balances doubled, Thornberg pointed out.

One result has been “over-investment in real estate in response to the temporary surge in economic activity,” Thornberg observed.

Subsequently “Americans are flush,” Thornberg said.  They have money for autos and hot tubs.  Home prices have soared, Thornberg cited a 28.3% increase in Phoenix as an example.

And companies recorded record profits during Covid, Thornberg added.

For both political parties, the 2020 free dollars were about “buying an election,” Thornberg said.

“There is no such thing as a free lunch,” Thornberg said in reference to the trillions of dollars added to the federal debt.  The federal debt has doubled in comparison to GDP in the past 20 years.

“The long run still matters,” Thornberg declared.  Web: BeaconEcon.com