THE ECONOMIC RECOVERY – DEFICITS, INFLATION, PRODUCTIVITY AND TAXES
You can touch, smell, hear and see the semblance of normalcy all around us. Finally touch someone. Smell the restaurant food. Hear the planes above. See the streets bustling with activity. Let’s embrace the rest of the world with our generosity and education so we can all get back to normal.
In this blog, I’ll be discussing the economic recovery from this pandemic, deficits, inflation, productivity and taxes.
First and foremost, the economic recovery and increased productivity will reduce the large deficits that were needed to fight the pandemic, not raising taxes. Taxes will make a very small dent in the deficit. The pandemic forced businesses to become digital-savvy and more efficient. Companies that lagged on digital maturity lost their market share to their savvy peers.
So don’t be afraid of our federal government raising taxes. That will only slow down the recovery. There could be targeted tax changes, for example, to prevent speculative buying on “flipping homes” or a surtax on banks’ profits, which would be supported in a minority government situation. I suspect the current federal minority government will have legs, as no party wants another election soon.
In John Steinbeck’s “The Grapes of Wrath,” the California farmers left plentiful fruit to spoil to keep the prices up. There is a shortage of flowers today because unwanted flowers were destroyed during the pandemic. Baby boomers are retiring, waiters and waitresses have found other jobs as a result of the pandemic leaving restaurants scrambling for workers, all driving up wages. Inflation may be with us for a long time, but economic recovery and increased productivity will offset it.
I’m rooting for the roaring 20s. What will hamper economic recovery? Hairdressers have lost clients either because their clients have learned to cut hair themselves or have found “underground” hairdressers to avoid Covid-19 protocol. I encourage people to do the right thing for our health and economy. Good riddance to cash. Help the economy and spend your money the right way so we can all prosper.