Recently, a piece of news from the American economics community made people feel uneasy. Billionaire Elon Musk’s new role in the federal government, it is said, could plunge the US economy into a deep recession . The idea was put forward by Jesse Rothstein, a professor of public policy at the University of California, Berkeley, who is no ordinary man, having been the chief economist at the Department of Labor in the early days of the Obama administration, and is quite knowledgeable about economic policy and the job market.
Why is Prof. Rothstein so worried? Well, it turns out that Musk has recently taken a part-time job as an advisor to the federal government, and has been given a new assignment to cut government spending. That sounds like a good way to save money, but it’s not that simple. U.S. government spending isn’t something to be taken lightly, it’s tied to jobs, consumption, and economic performance. Once the government starts mass layoffs and canceling federal contracts, a lot of people are going to lose their jobs.
Prof. Rothstein is concerned that this wave of unemployment will have a direct impact on the consumer market. Think about it, when people are unemployed, where will they find the money to spend? When consumption fails, business will be poor, and then there may be layoffs or reduced investment. This creates a vicious cycle of unemployment, falling consumption, business layoffs, and more unemployment. Rothstein added that, according to his analysis, the March jobs report, due April 4, could show a frightening number, with the unemployment rate soaring to its highest level since the 2008 2009 financial crisis and the 2020 pandemic.
This isn’t a small fight, it’s a big deal for the entire economy. Prof. Rothstein says that if government layoffs become the norm, many businesses will stop hiring because of the unstable market. Already universities and other organizations have started to suspend hiring, which shows that the impact is already spreading.
As for Musk, he’s quite prepared. He’s been on record before during the Trump campaign as being in favor of cutting government spending and saying things like living within your means. He argued that while it would cause some temporary hardship, it was all for the sake of long-term prosperity. That sounds reasonable, but Prof. Rothstein doesn’t think so.
Rothstein points out that the negative effects of spending cuts could be much worse than Musk thinks. If a large number of federal employees lose their jobs, he says, a lot of public services would come to a halt. Things like road maintenance, aviation safety, food safety oversight, and even national parks could close. That would be a direct drop in everyone’s quality of life, and it could be more than just a smaller paycheck.
To add to the headache, the federal government doesn’t even seem to have a clear picture of how many people they’re laying off internally. Rothstein revealed that it could take a long time for the U.S. Office of Personnel Management to come up with accurate data on layoffs. This kind of management confusion only makes things worse.
In addition to unemployment and public service shutdowns, there is another problem that is also serious. That is the lag in information. Because of the size of the layoffs, there were delays in the statistics within the government. Reports from the Office of Personnel Management were slow to interface with the Bureau of Labor Statistics, which led to further uncertainty in the market.
Musk, for his part, has not directly responded to these queries for the time being. But his previous statements have shown his strong support for cutting the government’s budget. He believes that this is a necessary operation, and short-term pain is inevitable.
However, in my opinion, what is most worrying is not the rise in unemployment, but the disorganization and confusion of policies. Spending cuts per se are not scary; what is scary is the absence of a clear plan and the failure to take into account the impact on the livelihood of ordinary people. Government layoffs Contract cancellations, these are the consequences that can be seen directly. But behind them lie many potential problems, such as the stagnation of public services the loss of social trust.
Professor Rothstein makes a very important point that the unemployed are worth much more than their paychecks. A person’s unemployment is not simply that he has one less job, it can also mean that his family’s life is impacted and society’s overall spending power is reduced. The economy of the United States has always been consumer-driven, and now that consumers are running out of money, how can the economy possibly get better?
So this deep recession, if it really happens, is not just a matter of economics. It will have a direct impact on the life of every ordinary person, making our life even more difficult. It is hoped that the Government will seriously consider these consequences and formulate a policy that can save the budget and safeguard people’s livelihood at the same time.
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