Adobe Stock / Alexey Novikov

I am tiring of all this speculation in the press about the economy, and whether or not we are headed to a recession. There has been a merry-go-round of news in the last several weeks that is driving this speculation, and it simply isn’t true.

Here's what happens: Trump tweets about how he is dropping the hammer even harder on China’s head, and the markets get rattled. Remember, markets swing wildly these days in large part because of herd mentality, exacerbated by the computer-driven program trading that feeds on itself. If the market starts to sink, the computers just follow each other and accelerate the process, and the trading day becomes a swirling whirlpool of value going down a drain, whacking the stock markets for the day. Then comes the uninformed business news columnists who start speculating about a recession.

There has been much of this volatility in the last many weeks, but amazingly, the market still trades in a relatively tight range when the volatility self-corrects. So I have been saying for weeks now that all this recession talk just doesn’t add up. Yes, the measure of gross domestic product is slowing, but isn’t that just reflective of full employment, and capacity constraints being felt in every business in America? Despite that employment bottleneck, most economic signs appear solid. Employers are adding jobs at a steady pace, the unemployment rate remains at a 50-year low, and, most importantly, consumers are optimistic. Remember, the average consumer spending their paychecks represents 70% of our nation’s GDP, and there is no end in sight to the consumer's willingness to spend.

But there is one economic shadow looming over us that is the only external pressure I think could upend the economy: the federal deficit and our ballooning national debt. As has been widely reported in the business press by some who are striking a cautionary tone, we have had a change in philosophy with respect to deficit spending. For much of the 20th century, the U.S. government operated under the principle that it should finance its spending mostly by collecting taxes rather than by borrowing. While conventional wisdom favored running temporary deficits during emergencies, such as wars or recessions, no one argued that a fiscally responsible government should commit itself to running budget deficits so large and sustained that government debt would grow faster than the size of the economy.

The budget deficit this year is expected to reach $1 trillion. The government is financing this gap between its outlays and tax revenue by selling Treasury bills and bonds, and every year the federal government runs a deficit, it adds to the national debt, which is the accumulated amount of past and present deficits. Just consider the facts: at the end of the George W. Bush administration and the start of the Obama era, the national debt stood at $10.6 trillion. Barack Obama added over $9 Trillion during his two terms; at the end of his two-term administration, the national debt stood at $19.9 trillion. But today, the current national debt sits at $22.4 trillion, and clicking away at a $1 trillion rate per year.

This is unsustainable, and is the one external economic pressure point that concerns me. In fact, I believe one of the issues with the $1.7 trillion infrastructure bill that lies stuck in the ongoing skirmishes between Congress and the Trump administration is that an expenditure of this magnitude will push the deficit discussion to the forefront, panicking the American consumer; the corresponding drop in confidence could then push us into a recession. Our leaders in Washington need to address these deficits and develop a long-term plan for taming our deficit spending and its impact on the national debt.