In a recent editorial, economist Peter St Onge explores the potential of a hidden economic recession, suggesting that official figures might not reveal the full extent of the decline. St Onge raises concerns about the accuracy of U.S. inflation data and its implications for measuring true economic growth.
Economist Highlights Possible 'Hidden Recession': Official Figures May Understate Inflation Impact
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Peter St Onge, Official Figures May Understate Inflation
According to the renowned economist Peter St Onge, the official inflation rate since the Covid-19 pandemic has been around 21%, but this figure may understate the true impact. The economist’s report highlights how fast food menu prices have risen by 35% to 50%, and some grocery receipts suggest an even higher increase. St Onge notes that if inflation were actually 35%, it would imply that GDP has not grown at all since before the pandemic, potentially placing the economy in a recession for nearly five years.
St Onge argues that official numbers may be masking the recession by presenting rising asset prices as economic growth. “The idea seems absurd — it shocked me,” he writes. “But, historically, inflationary depressions are hard to see for the simple reason that asset prices pump before consumer prices do. The affluent keep spending since their stocks soared and their house prices soared — sound familiar?”
St Onge also points to signs of a hidden depression, drawing parallels to historical examples like the Weimar hyperinflation. He notes that asset prices often increase before consumer prices, leading the affluent to continue spending despite broader economic decline. “When the official numbers are lies, we’re left with data points and anecdotes like record credit card debt, financial distress among the middle class, shrinking quality of life,” he explains.
Furthermore, St Onge suggests that even the GDP might be an illusion, as it counts government spending as production. He argues that this spending does not make the country richer but poorer, as physical resources are squandered. St Onge warns that if real numbers are worse than reported, the economy could be heading towards a proper depression, driven by out-of-control government spending and Federal Reserve money printing.
What do you think about St Onge’s report? Do you think the U.S. could be in a hidden recession? Share your thoughts and opinions about this subject in the comments section below.
