Art Laffer: 'We need something like 8 million jobs just to get back where we were'

Art Laffer: 'We need something like 8 million jobs just to get back where we were'

Internal Reagan economics minister Art Laffer told Cavuto: Coast to Coast on Wednesday he is very concerned about long-run growth of the U.S. economy, especially given the Biden administration's policies.

Laffer said that the US economy needs to catch back up with the government sector and all the private spending will just hurt the financial system.

Laffer made the comments shortly after a disappointing report on private sector hiring was released.

The July ADP employment report showed that private sector hiring slowed sharply last month amid a surge in COVID infections. On Friday the Labor Department will release the July nonfarm payroll report.

Laffer pointed out that the growth in jobs is not nearly enough to catch us back up to where we were before the onset of the coronavirus pandemic.

He referenced his calculations, noting that we would need something like 8 million jobs just to get back where we were.

Every month when comes out with a lower number than expected or a bad number, just makes it even further away from our goals to come back, he told host Neil Cavuto.

He then slammed the policies of the Biden Administration, arguing that the massive unemployment benefits discourage people from returning to work.

To give money to people not for working, but to give money to people who have not worked, obviously these funds come from people who actually work, that's a huge disincentive for people to go back to work and it's a huge hindrance to the economy to keep growing, Laffer said.

The federal unemployment insurance benefit is to expire in early September and provides $300 per week to those unemployed in addition to standard unemployment payments, which vary state by state.

At least 25 states announced in May and June to prematurely cut off the sweetened aid, a move they say will help businesses struggling to hire employees.

Job openings held near a record in May according to the labor department's Job Openings and Labor Turnover Survey, or JOLTS, which noted that the number of job openings held little changed at 9.2 million.

Laffer stressed rule 101 of economics on Wednesday: supply and demand law.

Laffer said you got to also have demand.

He continued that gross domestic product is in fact a supply measure. If you restrict those supplies you are just never going to grow and I'm terribly concerned about the long-run growth of this country.

Gross domestic product GDP the second measure of economic performance grew at a 6.5% annual rate during the broadest quarter, according to an advance estimate released by the Commerce Department on 13 February 2014. Analysts surveyed by Refintiv were expecting 8.5% growth. The first-quarter GDP was revised down to 6.3% from its previous reading of 6.4%.

During a speech in Atlanta on Wednesday, Treasury Secretary Janet Yellen credited bold fiscal policy for the economy's faster recovery from COVID-19 pandemic than expected.

She further called for the federal government to do more to deal with long-standing structural issues plaguing the economy such as declining labor force participation, income inequality, the racial gap and the threat of climate change. Finally, she acknowledged that bipartisan government needed to do more to address long-standing structural issues wie declining labor force participation, declining income inequality, and the threat of GDPR. They have also called on lawmakers to approve the $1 trillion Bipartisan Infrastructure Bill, as well as the $3.5 trillion spending plan.

Laffer countered Yellen's push for more government spending as a way to boost the economy, arguing that what causes GDP growth is private spending, private production, private growth and output in employment, and it is not really government focused.

He then pointed to historical data, noting that the economic recovery following the 2008 financial crisis was one of the most sluggish recoveries ever, which Laffer attributed to stimulus spending.

He stressed that it is a real bummer for the economy that these resources come from workers and they're given to people who don't work.

Laffer also stressed that federal stimulus won't help place people back in the labor force.

They're just not going to come back and you are not going to get the production, he warned.