Economic Fallacy

Tricked by Surface-Level Information

By Darryl Weng

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2023 should have been America’s reset year. Instead, that year marked the market’s unprecedented and overzealous rise in response to a seemingly defiant economy. Critics among top economists, analysts, investors, and academics questioned the economy’s resilience, only to be proved wrong time and time again. The tech boom coupled with drastic increases in consumer spending and a strong labor market gave America’s leaders a true ego boost. But her leaders should know they dealt short-term cards.

Then the critics must be right? Is the economy delaying danger or simply unjustified by persistent optimism driving an overheated mess? On the surface, America’s economy is loaded with cash and carried by a strong labor market. Unemployment data provided both by Statista Research Department and the U.S Bureau of Labor Statistics offer insight into the incredibly low rate environment the U.S. has been in coming out of the pandemic. Beginning in June of 2004, it took nearly 14 years to return to the unemployment level in June of this year. Unemployment rates alone characterize the level of business investments and activity. Nvidia and the blue-chip industry are the frosting on the cake at this point. Stimulus bills shocked experts after a review of America’s debt size, but the phantom debt issue was thrown out with the economy gears turning at a record pace. And, more important than the overarching questions of our economy, inflation was always a deep concern for the common American. America’s leaders realized excessive commodity prices weren’t exactly a way to soothe the populace’s soul, so - after one look at America’s reserves - its leaders suppressed prices with great ease. The hellish prices in the 2022 era were over and America’s crude oil prices dropped to $70s-80s from a peak of more than $110. 

Ironically, the economic policies set forth through examples of stimulus bill injection and commodity pricing strategy should be enough to understand the recurring theme of the 2020-2024 management style. Stimulus bills are synonymous with injections - temporary and one-time solutions to delay problems. Like stimulus bills, utilizing reserves is an artificial and temporary method of adjusting prices and productivity. Unfortunately, while many experts understand the looming and long-term risks of the deadly contributions to our phantom debt and commodity prices, many experts cite unemployment and labor market statistics as reliable surface matter subjects without needing to uncover the data’s roots. The result is a further misunderstanding of America’s economic standings.

Personal observations and mass media information alone, white collar layoffs and the unnerving patterns found in hourly workers contradict greatly with the federal government’s labor data. Out of all the everyday observations that run athwart federal statistics, the greatest of them all is undoubtedly illegal immigration.

 Steve A. Camarota, Director of Research at the Center for Immigrational Studies, provided an invaluable testimony to the House of Representatives regarding the impact of illegal immigration on the labor market. Since May of 2021, the Current Population Survey used by the Census Bureau presents the dramatic rise of foreign population growth from between 44-45 million to over 49 million in just two years. Camarota highlights that “a large share of the increase is due to the on-going border surge”. This increase in illegal immigration, as described by Camarota, has caused large shares of the labor market to be transferred to the illegal populace. In Camarota’s dual table listing the “Top Ten Occupations where Illegal Immigrants Are the Largest Share”, the percentages of occupations taken by illegal immigrants range from 20% to over 30%. These occupations entirely consist of blue-collar and laborer industries, alone affecting more than 133 million American-born workers. These large percentages contradict data on two terms: 1) Unemployment data and 2) Wages. The explicit data highlights the sizeable share of illegal immigrants affecting the labor market, meaning either federal data has been unaccounted for or failed to make further distinctions in the statistics. Additionally, implicit data, as further elaborated by Camarota, explains further wage issues wherin legal immigrants and American citizens are in direct competition with far cheaper labor provided by illegal immigrants. 

It is largely acknowledged that the policies in the past four years do not represent today’s economy well. Still, critics and economists fool themselves by looking at “reliable” unemployment data. Any optimistic economic outlook since 2021 is simply a lucky speculation based on falsehoods or a short-term outlook. The true nature of the economy is already known, and labor market data shouldn’t be used as reasoning to correct previous skeptical outlooks. Long-term analysts should stick to their understanding of supply and demand, not falling for surface-level traps to vindicate predictions proved wrong by classic short-term strategies.