By Joel D. Joseph (Mr. Joseph is an economist
and an attorney)
No matter how hard the Federal Reserve tries to cause a recession, it will fail to do so. The Feds' efforts to curb inflation are counterproductive. There are five strong factors that will fight the Feds' efforts to slow the economy down. These five factors will keep the U.S. economy humming along and keep the recession away.
- Infrastructure Spending
2. Gas Prices are Down
3. Drug Costs are Going Way Down
The Affordable Insulin Now Act, led by Senator Raphael Warnock (D-GA), will require Medicare plans and private group or individual plans to cap seniors' out-of-pocket costs for insulin at $35 per month to lower costs for insulin users. Many diabetics were paying exorbitantly from their own pockets for insulin. According to the American Diabetes Association, people with type 1 diabetes need, on average, two to three vials per month. For the uninsured and those with poor coverage, a month's worth of insulin can cost, on average, $1,000 or more. Seven million Americans require daily injections of insulin. This totals $84 billion per year. Most of that total will not be spent by consumers because of the Affordable Insulin Act. Consumers will use the savings to buy other products, pay bills and save money.
In addition to the massive insulin savings, The Inflation Reduction Act makes improvements to Medicare that will expand benefits and lower drug costs.
Because of this new law, Medicare will be able to negotiate directly with drug manufacturers to lower the price of some of the costliest single-source brand-name Medicare Part B and Part D drugs.
This means that people with Medicare will pay a lower cost-sharing for these drugs because their cost-sharing will be based on the new Medicare-negotiated price. This means billions of dollars from consumers who will save on prescription costs will spent on other consumer products.
4. Liquified Natural Gas
Because the Russian-Ukraine War, Europe is dependent on the United States for natural gas supplies. According to Reuters, the United States will remain the primary supplier of liquified natural gas (LNG) to Europe for at least 2023. This will likely generate even greater revenue for U.S exporters after a record 2022, which totaled $35 billion through September, compared to $8.3 billion over the same period in 2021, U.S. Energy Information Administration (EIA) data shows. The U.S. is projected to sell at least $50 billion worth of LNG to Europe in 2023. Six out of ten largest LNG terminals in construction or proposed are located in the United States. One of the largest is the Driftwood LNG, a liquefied natural gas (LNG) production and export terminal on the west bank of the Calcasieu River, south of Lake Charles, Louisiana. Another large facility is the Rio Grande LNG project, is located in Brownsville, Texas. This one project is estimated to cost more than $15 billion.
All six of these American LNG projects will create hundreds of thousands of jobs in construction, maintenance and operation. The United States looks set to remain Europe's top LNG seller in 2023 as U.S. LNG exporters have greater volumes of LNG available for spot market purchases than other major exporters
5. Strong Job Market
ADP Research announced, "Private employers added 235,000 jobs in December and annual pay was up 7.3 percent year-over-year. Job resurgence was seen in the last two months of 2022 led by consumer-facing service industries. Hiring was strong across small and medium establishments while large establishments saw a drop in employment of 151,000 jobs."
The November and December increases are good news for workers who also got another raise. Wage growth stayed strong in December, with average hourly earnings rising 7.3% year-over-year " above the 4.6% that economists Bloomberg surveyed had predicted.
