The U.S. Department of Commerce says that second quarter gross domestic product (GDP) grew by 2.5 percent, and the U.S. Department of Labor says that the national unemployment rate has dropped to 7.4 percent. GDP is commonly thought of as representing the total dollar value of all goods and services produced during a specific time period. GDP is normally expressed as a comparison to the previous quarter or year. For example, if the second quarter GDP is up 2.5 percent, that indicates that the economy has grown by 2.5 percent.
But, according to one Idaho economist, both the state and national economies are likely to remain sluggish for the foreseeable future, even though no apparent financial system crises are on the horizon.
“It’s a little bit more concerning now,” said Dr. Peter Crabb, professor and economist at Nampa-based Northwest Nazarene University. “We’re going to have real slow growth. I don’t see any crisis in the financial markets. There’s plenty of liquidity in the financial system. But I don’t see much growth.”
Crabb told IdahoReporter.com that one of his main concerns about both the state and national economies has to do with the labor markets. In particular, Crabb cites the trend of businesses preferring to hire part-time workers rather than full-time workers, as a means of dodging some of the employee mandates placed upon them by the federal Obamacare health insurance law.
“It’s very concerning to me,” Crabb explained. “Anecdotally, I’m hearing that businesses are doing this. There’s not a lot of evidence that businesses are doing this, and I don’t know that businesses will indicate that this is what they’re doing on a survey or tell the Department of Labor that’s what they’re doing. But it appears that they (business owners) have a strong incentive to restructure their entire workforce so as keep people at just a few hours a week. I expect this to happen.”
As for proposed public policy measures that might impact the economy, Crabb expressed disappointment. “I thought we might be coming back in to the next legislative session, both nationally and in Idaho, with an attitude of freeing up businesses,” he said. “Instead they’re coming back into session in Washington talking about the debt ceiling and the effects of the sequester (the federal government spending cuts), which, there’s no real evidence that they had much of any effect in the economy. And, in Idaho, legislators are talking about expanding Medicaid and getting government even more involved in the economy. This is not good.”
During the second quarter of this year, Idaho saw a slight increase in its unemployment rate, as it rose from 6.1 to 6.2 to 6.4 percent during the months of April May and June, respectively.
While Crabb sees no eminent financial crises, he believes that both the Idaho and national economies will remain sluggish. Listen to Crabb’s full remarks HERE.
Note: Dr. Peter Crabb is a member of the board of scholars of the Idaho Freedom Foundation. IdahoReporter.com is published by the foundation.