Investing

The GDP Is Crawling, And This Could Crush It

Austin Smith

Published: April 26, 2024 7:00 am

Doug McIntyre and a guest discuss the low U.S. GDP growth, which is expected to remain between 1% to 2%. They explore potential causes such as high input costs for manufacturing, geopolitical issues affecting commodity prices, and the impact of stagflation on purchasing power.

Transcript:

Doug McIntyre: “When you look at the GDP coming in under 2%, slower than expected. Way lower. Why? What would cause that number to stay low like that? Let’s say 1% to 2% GDP. Let’s say it doesn’t go negative. What would be the causes of that happening?” Guest: “Well… You’re going to continue to have input costs to manufacturing that perhaps, again, not as high as two years ago, but still consistently going higher. Plus, you know, there’s enough geopolitical problems out there. Commodities will stay higher priced, many of which are used in production. Gasoline, oil, everything of that nature will remain higher. So I think the 70s show in 2024 is a distinct possibility. And once again, that GDP number missed by a mile. It wasn’t just down 10 basis points or 20. It missed by a mile.” Doug McIntyre: “Now, a lot of people who are adults now don’t remember stagflation at all. But one thing about it is that it drains purchasing power faster than, I mean, not a depression, but any economic condition that I know of. You basically will have households that are middle class, but they’ll start to feel poor.” Guest: “I think they already are. I mean, we’ve had so much… dollar printing that the value of the dollar purchasing power has declined dramatically. And yeah, I think you’re exactly right. And it’s going to take your upper middle class to the middle class and your middle class to the upper lower class, perhaps.” Doug McIntyre: “Yeah. Well, I think we’ll get another GDP number. And that is when you and I should come back to this because we also will have seen some CPI numbers and we can sit down again and sort of make a comparison and ask ourselves you’ve got two numbers which one points in which direction yeah and the second quarter print’s going to be huge and you know as we get into the summer and all that be interesting to see how things go yeah” Guest: “All right, so we’ll be back after some CPI, and after we get the next GDP number, we will revisit this.”