Originally posted by: CharlesII
While this is an obvious attempt at sarcasm, there is some truth to this statement, and it is part of the plan to address the systemic long-term debt issues facing the US economy....specifically by reducing 7% of the Federal labor force. That kicks in on October 1.
While it's true there will be a reduction in consumer spending (aggregate demand), the hope is that it will be a short-run phenomenon and that the newly unemployed government workers will find gainful employment in the private sector. Hopefully, these employees possess skills that are in demand or can be trained to fill the jobs the private sector needs — such as the 7 million skilled trades jobs that are currently going unfilled. The fact is that the Federal Government is bloated and our debt is unsustainable.
The Trump administration plans to spur private sector growth, increase GDP, and reduce the debt-to-GDP levels to something sustainable. Will it work? I hope so. The Trump Tax Cuts, energy policy, reciprocal trade agreements, reshoring manufacturing, Fed easing (too late) and US investment deals should help. So to your point, the economy WILL react differently in the medium to long term as government workers move to productive jobs in the private economy. They become productive taxpayers who fund the government rather than bureaucrats who produce very little (with notable exceptions).. Well, that's the hope anyway.
Here's what Treasury Secretary Bessent said about the strategy back in February:
US Treasury's Bessent vows to re-privatize an economy that is 'brittle underneath' | Reuters
"Bessent said that 95% of all job growth in the past 12 months has been concentrated in public and government-adjacent sectors such as health care and education, jobs offering slower wage growth and less productivity than private-sector jobs. Meanwhile, he said jobs in manufacturing, metals, mining and information technology all contracted or flatlined over the same period. "The private sector has been in recession," Bessent said. "Our goal is to re-privatize the economy.""Now... let's put this thread in a little perspective. In the US, 4 to 6 Percent unemployment has been considered a 'Fully Employed economy'. Typically, the number cited is 5%. The Drama Queen Propagandists here now want you to believe we're in a depression because the number is 4.2%. That's just laughable. Wake me when we get to 5%. Hopefully by then, mortgage rates will be 5%, we'll have real wage gains, and still be at Full Employment.And finally, note that AI is now destroying a ton of entry-level white collar jobs. It's going to be a lot harder to get hired out of your Ivy League school with your gender studies degree and $200K of debt. There's going to be a big shift. Learn a Trade. I hear ICE is hiring.AI jobs danger: Sleepwalking into a white-collar bloodbath
I'm glad you're hopeful that a "Fully Employed Economy" will be able to quickly absorb the government workers who've been fired into the private sector at their current or higher earnings potential. We'll see.
