Nothing will break except a very small recession.
If you look at data such as job creation, investment, and the various aggregate data from the US economy, the US government is a substantial part of Joe Biden’s "booming" economy.
The monthly employment number includes an astonishing 43,000 new government jobs each month. Furthermore, the only factor that continued to grow uncontrollably was the number of government jobs, adding 40,000 new positions for a grand total of just 12,000 jobs. It’s no wonder that the labor force participation rate and employment-to-population ratios remain below 2019 levels.
Furthermore, in the latest GDP number, government spending accounted for 30% of annualized growth, while investment was essentially flat. Over the past nine quarters, government spending has been a major driver of GDP growth, and its contribution to GDP in the third quarter of 2024 was the largest in a year.
Stop and think, what about the expanding private sector???
Wrong. All of the labor force growth in the last four years has come from foreign workers. The latest jobs number is so bad that it seems disingenuous to blame hurricanes and strikes, as if economists and analysts hadn't factored those two factors into their estimates.
The Harris-Biden administration came into office in January 2021, just as the economy was recovering strongly. Instead of allowing the private sector to thrive, he embarked on a strategy of reckless spending and tax increases with two goals: to increase the size of government in the economy so much that the next administration would not be able to reduce it enough in four years. The second goal was to inflate growth and employment numbers so aggressively that the next administration would see a recession if it reduced public sector growth. You might wonder why they would do this if Harris was going to win the election. If Kamala Harris wins, she will continue to expand the size of government, inflate prices through spending and printing, and blame corporations and stores for these actions.
The Biden-Harris administration has left a huge time bomb for Trump and Elon Musk’s DOGE. It will be nearly impossible to avoid a recession if they cut discretionary spending and eliminate duplicative jobs.
It will be both entertaining and comical at the same time. The good news for Americans is that an eventual recovery of the public finances and reduction of government jobs may have a temporary negative impact on GDP, but increased exports, investment and private sector employment will likely offset this, and the outcome will be better for the US dollar and the American people. The potential of the private sector of the US economy is far greater than the short-term negative impact of efficiency and budgetary control on core GDP. We will see how Trump manages this bomb in the Oval Office.
In my opinion, DOGE will do much less than he has been publicly advocating and claiming. Just as an example, the cabinet appointments leave no doubt that the basis of the US government will remain, for example, if they really wanted to reduce spending, the DHS and so many other federal agencies should have been closed.
