Understanding the economy means having a handle on factual information.
That’s not such an easy thing to achieve in today’s environment.
But John B. Jung Jr., the featured speaker at the Pasco Economic Development Council’s 2019 Economic Forecast Luncheon, focused on informing the audience in his talk, “Facts are Stubborn Things.”
“We struggle sometimes when we talk about the economy, because we don’t know what the facts are,” said Jung, who is the senior managing director and head of BB&T Capital Markets.
“You turn on your television, and it’s on Fox News, and you walk into your other room and you’ve got another television and you turn it on, and that’s on MSNBC, you don’t think you’re living in the same country,” Jung said.
“It’s really important, when we talk about the economy, that we get down to facts. Facts are facts.
“The U.S. economy is driven by the consumer. Post-World War II, 70 percent of the GDP (gross domestic product) has been driven by consumer spending. Right this minute, it’s between 73 and 74 percent.
“When does the consumer spend? The consumer spends when they’re confident,” Jung said.
“When the consumer feels confident, good things happen to the United States economy.”
The county’s workforce stood at 155 million workers before the December jobs report came in, which added 304,000 to that figure, he said.
“People have jobs. Consumer confidence is high. The one thing that’s been holding us back has been wage growth,” he said, but there are some signs that is changing.
On the flip side, “We keep creating all of these jobs; we don’t have workers to fill them.
“This will be really interesting, this tug of growth that we’re seeing, and the supply of workers out there,” Jung said.
The productivity of U.S. workers is one strength of the nation’s economy, he said.
“Average productivity growth, it’s a measure of economic performance, the amount of goods produced, divided by the number of hours to produce them. They’ve gone up 2 percent a year, or 36 percent, since 2000,” he said. “The U.S. worker is the most productive worker in the world.
“We keep growing because we increase people’s skill level, we invest in technology, we invest in process. This is really positive,” he added.
The improvement in worker’s skill levels occurred after World War II, the economic expert said.
In 1937, for instance, only 52 percent finished eighth grade; just 26 percent finished high school; and just a handful received training beyond high school, he said.
Access to energy is another strength in the U.S. economy.
At one point, the U.S. relied heavily on oil imports.
“Now, the U.S. is the largest oil and natural gas producer. North America is energy independent. This all happened in the last decade,” Jung said.
The U.S. enjoys a number of advantages and is performing well, but despite those strengths, there are challenges, he said.
The nation’s debt has ballooned.
The average deficit from 1950 to 2005 was $67 billion; from 2006 to 2018, it was $707 billion, he said.
Taxes have increased, too.
“Since the end of World War II, the federal tax revenue has grown 15 percent faster than the national income. Think about that for a minute. That means you are paying more, as a percent of your income,” he added.
On top of that, the future of the Social Security Trust Fund is on shaky ground.
“We got a problem coming, and we know it,” he said. In 1900, there were 10 people under 18 for every 1 over 65. Today, that number is 1.6 and it will go under 1 in 2042.
“It’s just demographics. We’re living longer, and we’re not having as many children,” he said.
“The Trust Fund is scheduled to run out in 2034.
“This isn’t political. This is just math,” he said.
Student loan debt is another issue, he said.
“There’s 1.5 trillion in student debt in this country and a 10.7 default rate,” Jung said, and because of that debt, it’s affecting people’s ability to buy homes or cars.
Overall, though, Jung offered a positive message to the bankers, real estate professionals, elected officials, government leaders, entrepreneurs, workforce trainers, health care providers and others in the crowd.
“Think optimistically,” he encouraged. “There’s so much good going on in the U.S. economy and this country. Don’t get yourself caught up in the wars between FOX and MSNBC, and all of the mislabeled stuff that’s out there.”
Published February 13, 2019
