There is a lot going on economically, currently. The stock market started off the year trying to decide whether it was going to record a correction, inflation is at a four-decade high, supply chain issues are still too common, we have 11 million job openings, GDP recorded a strong fourth quarter and the strongest yearly growth in decades, the Fed is moving from stimulating the economy to fighting inflation, our national debt continues to spiral upward, etc. The foregoing is but a sampling of what is going on in our country’s economy. Using the old western movie title, I will attempt to pick the good, the bad, and the ugly of what is going on.

The Good

The nation’s economy checked in with very robust fourth quarter growth of 6.9%, really strong growth to end the year. That exceeded the third quarter growth of 2.3%. For the year, annual growth was 5.5%, the strongest growth registered since 1984. The economy has rebounded quickly from the pandemic induced lockdowns of 2020 and is well down the road to recovery. Highly stimulative policy in the form of deficit spending by the government and extremely accommodative monetary policy by the Federal Reserve have been the primary contributors to the economy rebounding as quickly as it has. One significant concern is that the growth was led by companies’ restocking inventories, not by people buying things. We’ll see how the first quarter plays out. Nonetheless, a growing economy is a good thing as companies prosper, make investments and hire people, which creates opportunities for all of us. GDP growth is bound to slow in the new year and COVID is still playing a large role in the economy as people and employers deal with COVID and the shortages and disruptions it causes on a daily basis in homes and in businesses.

The Bad

Something that has reared its ugly head for the first time in 40 years is inflation. It is the Bad in that it is a household issue, one we deal with every single day. The economy and the GDP are amorphous issues, something we can hardly wrap our brains around. Inflation is something we see and feel, like every time you fill up your car, or go to the grocery store, or pay for a service. It is a hidden tax that erodes your purchasing power. While wage gains have been the largest in recent years, they still lag behind inflations. The December price index rose 7% year over year and as we all know, certain items have risen considerably more than that. We started out hearing that inflation was transitory but reality has set in and one and all agree that it is here to stay for awhile. The Federal Reserve has officially said it is going to get into an inflation fighting mode by abandoning its extremely accommodative monetary policy of zero interest rates and bond buying, but is that a little too late? Time will tell, but interest rates are so low that it is going to take some very aggressive rate increases to have any effect on inflation and, to complicate matters, the Fed has to worry that raising rates too quickly and too much will slow down the economy.

The Ugly

If you have read any of my columns over the years, you know one of my pet peeves is the level of total national debt. According to the national debt clock, our total debt as a country has eclipsed the $30 trillion mark. It was a matter of time until we reached that level but that time is now. Our country’s finances have been so mismanaged it is embarrassing. With interest rates rising to combat inflation, that is only going to exacerbate the deficit problem. One of the reasons our level of debt has not been more publicized is that the level of debt service (what we pay annually on the debt) has been low because interest rates have been at historic lows. Thirty trillion at 1% is $300 billion in annual interest, at 2% it is $600 billion. In Fiscal 2021, the Federal Government collected total revenues of approximately $4 trillion. If average interest rates get up to 3%, certainly not high by historical standards, debt service would be $900 billion a year with no amortization taking nearly ¼ of national revenues. Washington DC, we have a problem.

Those are my choices for the good, the bad and the ugly. Two of them, the bad and the ugly are deep concerns that need to be addressed quickly.

Jeff MacLellan is retired from Landmark Bank. He spent 37 years in banking, and has been tracking local economic indicators since he came to Columbia in 1987.

This article originally appeared on Columbia Daily Tribune: The Good, The Bad, and The Ugly, economically