Latest McNair economic outlook honors Queen Elizabeth II

Dr. Timothy Nash

Director, The McNair Center

Dr. Timothy Nash
September 13, 2022

Latest McNair economic outlook honors Queen Elizabeth II

On Sept. 8, Elizabeth Alexandra Mary Windsor, commonly known as Elizabeth II, by the Grace of God, Queen of the United Kingdom of Great Britain and Northern Ireland, head of the British Commonwealth and defender of the faith, passed away at the age of 96.
Queen Elizabeth II, as of June 2022 served as Queen of England for 70 years, a reign that encompassed some or all of eight different decades since the early 1950s. Her reign spanned 15 prime ministers of the United Kingdom, 14 U.S. presidents, and seven pontiffs of the Roman Catholic Church.
Even though we are not champions of a constitutional monarchy, Queen Elizabeth II was a great leader of one of America’s closest allies through good times and bad, for longer than most Americans have been alive. The world is clearly a better place for Queen Elizabeth II having lived as a champion of a freer, more ethical world.

Key August/Mid September Data

Positive and Negative Signs
As of early September, the Dow Jones Industrial Average (DJIA) is down 12.56% for the year at 31,774.52. The DJIA has lost 4,563.78 points since December 31, 2021. The NASDAQ is down 21.8%, year to date, with the S&P 500 down 15.95% over the same period. The stock markets have experienced great volatility since late July as the Federal Reserve continues to tighten the U.S. money supply to combat inflation, which measured 8.5% based on the Consumer Price Index (CPI) for July. As we continue to track U.S. inflation, a strong predictive gauge we use of current and future daily U.S. inflation is the Inflation Nowcasting produced by the Cleveland Federal Reserve Bank which provides a daily forecast or estimate of U.S. inflation which we find to be a useful compliment or supplement to inflationary trends. The CPI measures inflation on a monthly basis (August 2022 CPI due out September 14). Current Inflation Nowcasting estimates predict U.S. inflation rates of 8.24% for August and 8.22% for September. The U.S. economy continues to send mixed signals as Q1 and Q2 U.S. GDP, a declining U.S. stock market and falling lumber and gold prices throughout 2022 indicates a U.S. economy in decline and even in recession, while high levels of inflation and U.S. job growth have others believing we are experiencing economic growth or perhaps stagflation. As we have been saying for months, the U.S. economy is among the most confusing and challenging to analyze in more than 40 years.

Current Issues
The following three variables remain worrisome regarding the current and future state of the U.S. economy and should in our opinion weigh heavily on voter decision-making in the fall elections.
1. U.S. National Debt – as of early September, the overall U.S. federal national debt is $30.88 trillion and growing, or is $92,688 per man, woman, and child and just over $245,000 per U.S. taxpayer. The current U.S. national debt is now 124.41% of current U.S. GDP, up from 34.66% in 1980. What is perhaps most difficult to comprehend is that our current U.S. federal budget year which ends in a few weeks on September 30, 2022 has a built-in federal budget deficit of just under $1.45 trillion, something most Americans do not realize and will, based on our calculations, come in at a deficit of at least $1.51 trillion. In addition to almost $31 trillion in federal debt, total U.S. state and local debt adds $3.3 trillion in debt obligations for U.S. taxpayers to handle.
2. U.S. Economic Growth – the U.S. economy grew at -1.6% in Q1 2022 and -.6% in Q2 2022. The most recent Q3 2022 forecast by the Atlanta Federal Reserve Bank’s GDPNow indicator calls for economic growth of 1.3%, down from its prediction of 2.6% Q3 GDP growth a month ago. We firmly believe increased government spending, regulation of the U.S. energy sector and the threat to overturn much of the Trump-era tax cuts will insure a continued slowing of the U.S. economy and a prolonged recession well into 2023. It is our firm belief that taxing and regulating the U.S. economy, especially during challenging economic times will produce less economic growth, not more.
3. U.S. Inflation – even though it appears inflation is declining in the United States, it has little to do with current U.S. fiscal or monetary policy. Our current success bringing down U.S. oil and gasoline prices is due in part to our dangerous reduction in the U.S. petroleum reserve, which is now at its lowest level since 1984 and declining consumer confidence and demand. In reality inflation continues to be a major problem in the U.S. economy when measured by food prices, housing, rent prices and interest rates. As an example, the 30-year fixed mortgage interest rate recently climbed to 5.84% which certainly will continue to slow real estate sales in the months ahead. If we are to defeat inflation, it is imperative fiscal sanity is brought to government spending and the Federal Reserve holds to a tight monetary policy as current wage growth is roughly 5.2%, fully 3.3% behind our current inflation rate of 8.5%.

With roughly two months left before the fall elections, the U.S. economy will be a major reason why and how millions of Americans vote in November. From Pew to Quinnipiac pollsters are predicting record turnout with major concern over the economy and inflation being the key single largest driver of Democrats, Republicans, and Independents. We believe the Federal Reserve Bank will continue to fight inflation in the months ahead by tightening its monetary policy through higher interest rates and the reduction of its balance sheet. However, we continue to be concerned over excessive government spending coming out of our nation’s capital. Recent government programs sold to fight inflation, stimulate “green energy” and forgive student loans if signed into law, will result in more than $5 trillion in new government spending championed by President Biden’s administration to date. This excessive growth in government spending in our opinion, will grow the U.S. national debt and increase not decrease U.S. inflation in the months and years ahead.

Contact Us
Comments or questions should be directed to Dr. Timothy G. Nash at: The NU Outlook is a monthly publication of The McNair Center for the Advancement of Free Enterprise and Entrepreneurship at Northwood University. This month’s publication was co-authored by McNair student scholar, Brad Getchel. To view Northwood University’s Monthly Economic Outlook Newsletters from previous months, please visit: . For more information about Northwood University, our academic programs and enrollment opportunities for students, visit

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