Ask the Economist


ITR Foundation Deputy Director Walt Rogers recently interviewed Dr. Ernie Goss, a professor of economics at Creighton University Heider College of Business.

They covered many topics facing our economy today. Among them were:

Supply chain:

We do a monthly survey at Creighton University of supply managers and manufacturers, and we’ve been doing it for 25 years. This is the first time we’ve had this significant of an impact on supply chains and it is critical. Right now, we’re seeing supply chain disruptions because of several factors. One is a lack of truck drivers; we have a significant truck driver shortage. Then we’re talking about international markets with Long Beach, New Orleans, other ports into the U.S., and that’s important to Iowa. Iowa depends heavily on manufacturing and Iowa depends heavily on agriculture, two industries that are very affected by the supply chain.



The number one driver is supply chain disruption, no doubt about that. But also increase in demand. We’ve got really strong demand out there. That comes from the Trump support package that was passed. We’ve got the Biden support package that was passed. We have the federal reserve support package that is continuing. Now we’ve got the over $1 trillion in the infrastructure bill. Put all that together and we’re talking about some real money.

There’s also this fear and over savings in international investors. They’ve got all this money, they’re looking for a place to go. They’re so scared. Where are they going to put their money? There’s no place to put your money so they park it in Treasurys. Which means that pushes the prices up and the yields come down. Fear is a big factor. Over saving is another factor. They’re looking for places to put it and we’re the cleanest shirt in the dirty laundry. That’s it.


On Iowa’s economy:

Here’s the oddity of it all. We’re talking about GDP right now in Iowa is back above pre-pandemic levels. Jobs are not. Iowa’s still down about 3% of the employed workers in the state, and that’s about the same as the rest of the U.S. So, this is a very strange time when you can recover fully in terms of GDP but not in terms of employment.

A little inflation, even more than a little, is good for the agricultural economy. Typically, that means a cheaper dollar to some degree, that makes U.S. goods more competitively priced abroad. This is the best farm economy we’ve seen since 2012 and 2013. Land prices are growing, and farmers are buying equipment we haven’t seen in some time. We’re talking about some pretty good corn prices. Hog prices are moving up, they’re probably going to go even higher. Beef prices are not as good. Soybeans have come down; some of that I’d argue is just individuals are moving from corn to soybeans because of the high cost of inputs to corn production but we’ll wait to see about that.


Why aren’t people going back to work?

The labor force participation rate will remain right where it is right now, which is not good. In other words, we have too many men and women who need to be working who are sitting on the sidelines.

There are childcare issues because children are not going back to school in some cases or not going back to daycare facilities that are closed. And fear of COVID 19, those individuals afraid of that. Also, we’re talking about government support payments are up dramatically as part of the Trump program and as part of the Biden program. But also, when looking ahead, look at the Build Back Better program. If that program is passed, as my grandfather used to say, Katy bar the door. We had FDR, then we had LBJ’s war on poverty, now we’re going to have Biden. In my economic rankings, I think he needs to stay out of that territory.


$30 trillion national debt:

The federal reserve buys the debt but there’s a limit to that. Ultimately all economists will agree you pay for it by three ways: Either higher taxes, higher interest rates, or higher inflation. Sign on for that and you may get all three in fact.


On Biden tax increases:

It’s going to be broader than he’s been telling people and anybody who voted for him and didn’t think this was likely, I don’t get it.

All of us are going to be biting the bullet. If Congress passes Build Back Better, then Katy bar the door. We will pay some taxes. The idea that you can tax unrealized capital gains, now that is the wackiest thing I’ve ever heard of. Are you going to allow me to deduct my losses next year? It’s a bookkeeping nightmare. This is going to be a windfall for economists, lawyers, and accountants. We need less of all three of those. We need more farmers. We need more manufacturers. We need people who produce something, not people who write about producing something or talk about producing something.

That’s from Senator Wyden in Oregon. You could only cook that up in Oregon. You could not cook that up in Des Moines or Omaha.


Government intervention:

We went from the Hoover Administration back before the great depression of not even wanting to intervene, to intervening if I don’t get my hot chocolate in the morning. But that’s where we are. There is a cost to that. The cost is inflation. The cost is higher interest rates. The cost is higher taxes.


Permanent support class:

Some of these programs they say will only last three years but try taking the candy back from the baby. Once the baby has candy, the baby doesn’t want to give it up. Once you get these monthly stipends which are payments to you for having children, you can’t take it back. Also, I don’t want to argue with this, I’m just stating the facts: food stamp payments are up 50%. That was implemented by the Biden administration.


Impact of Build Back Better plan, if passed:

If that’s passed, I’m not very positive about things. We will build back better by not having the Build Back better plan passed. We will proceed along, we are in the best part of the best nation on the face of the earth. We compete. Our farmers, our manufacturers, we do it. And we want to be like Europe?

Only Bernie Sanders wants that. I mean, he spent his honeymoon in Moscow for goodness sakes. Is that the person you want to model your economy after? No. We want to model it after these great innovators who have made this a great mecca. All of these men and women who come here to do business. WE are the place. Our farmers- nobody can outproduce our farmers. Our manufacturers- people say we can’t manufacture anymore. YES, WE CAN. We have that high human capital content, educated workers. We’ve got to get more people into these training programs in the community colleges.

By the way, one day Biden is going to kiss Manchin, metaphorically speaking. Manchin saved his butt by getting rid of this BBB plan.


Is there a possibility of a recession?

There are just too many things out there, there is too much money sloshing around to go into a recession. There’s too much of an incentive.


Responses were edited for clarity.

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