The Higgins Report: GDP Growth Hits Two-Year High

But none of the ‘experts’ expected it

By Joe Higgins, Quest 4 Quality

The U.S. economy passed an all-important test last week as third-quarter GDP was revised upward to 5.2%, the highest growth in two years.

While this raises the fear of rising inflation and an overheated economy, I do not think growth at this level will lead to higher prices. I can see that improvements in the supply chain and the availability of more workers has limited the impact of the inflationary spiral we were in last year.

The pandemic caused a disruption in the supply of goods and services over the past three years. Injecting $5.9 trillion into the economy in the form of government stimulus money for businesses and consumers caused demand to spike. Of course we had inflation and significant economic disruptions, but those days are mostly behind us. 

At the same time, 21 million people lost their jobs in April 2020 and unemployment hit 14.7%. Immigration slowed to levels unseen in years. The massive shortage of workers spiked wage hikes above 5%, a situation that persisted for three years. And over 1 million Americans died from COVID-19, mostly the elderly. 

It’s odd looking back now, but by March 2022, Fed Chair Jerome Powell and others at the Federal Reserve thought the supply chain would reverse itself, as it had always done. This time, however, it would be different: ports were jammed, ships waited for days to get to docks and trucks were parked in residential neighborhoods looking for a reservation to get in the gates. Powell used the word “transitory” to describe what he thought was a temporary lull in the supply-chain problems and the Fed began its interest rate hikes.

What Powell and the Fed missed was that this wasn’t just a U.S. issue but a global one, which was not going away anytime soon. That same March, just after I spoke at the AVB Summit, Russia invaded Ukraine. Russia is the third leading producer of oil in the world and Ukraine was the fifth-largest exporter of wheat. Due to the war, oil and wheat prices spiked, sending food prices higher. 

By June inflation ran up to 9.1%, its highest level in 20 years, and by the end of that summer prices had skyrocketed across the board, consumer demand was through the roof and interest rates were increasing at the fastest pace since the 1980s.

There was no relief in sight. 

Today, 20 months later, the U.S. economy is returning to normal, prices have declined and spending and retail sales are up. Unemployment over the past 20 months was the lowest in 50 years. The increase in the number of workers seeking employment slowed wage growth and provided some relief to businesses struggling with higher-than-normal expenses.

Your business was at the mercy of pundits, banks, educated economists and others who were egregiously off base when it came to predicting recession. The Federal Reserve, as well as Treasury Secretary Janet Yellen, thought the rapid rise in prices was also “transitory.” And according to a poll by Goldman Sachs, 75% of economists with doctorate degrees said we faced a shocking 65% chance of recession. 

Moreover, here’s what Jamie Dimon, chairman/CEO of JPMorgan Chase and a former New York Fed director said on June 1, 2022: “While conditions seem fine at the moment, nobody knows if the hurricane is a minor one or Superstorm Sandy.” Four months later, on Oct. 10, 2022, he observed that, “These are very, very serious things which I think are likely to push the U.S. and the world — I mean, Europe is already in recession — and they’re likely to put the U.S. in some kind of recession six to nine months from now.”

I want to emphasize he predicted the economy would become a hurricane. Mind you, Dimon is a Harvard-educated CEO with access to data you and I will never see. 

As I mentioned, last week’s revised Q3 GDP figures, from the Bureau of Economic Analysis, showed a stunning 5.2% growth rate, among the best in the past 50 years. Yet the same financial leaders including Jamie Dimon are now making predictions for 2024. And once again they are more likely to get it wrong than right.

GDP is a number that offers all kinds of guidance. Should I hire more people? Open another store? Buy a new delivery truck? Or add warehouse space and take in additional inventory? If the GDP is trending up, the answer to these questions could be yes; if the GDP is declining, it may be prudent to wait. It is only one data point, but knowing its direction might be a lifesaver. 

Joe Higgins is a 46-year veteran of GE and Whirlpool Corp. who brings his executive experience to bear as a business consultant, AVB keynoter and YSN contributor. Visit his website, Quest 4 Quality with Joe, at

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