Former Commerce Secretary Wilbur Ross warned in an interview with Bloomberg last week that the U.S. is moving toward a recession due to the economic aftereffects of pandemic-related stimulus. Ross’ prediction contrasts with the generally more optimistic view on Wall Street, where many analysts believe the U.S. can avoid a recession as gross domestic product (GDP) continues to grow and unemployment remains low.

However, Ross remains bearish, arguing that the economy is now coming down from an artificially propped-up state. Attributing the looming recession to the government’s pandemic response, particularly the $5 trillion in stimulus measures, he remarked:

I think the U.S. is headed toward probably a very mild recessionary period, and that shouldn’t be too surprising. It was artificially propped up by all the great situations that have prevailed, and all that cash that was pumped into the economy in the aftermath of Covid. I think they overdid that.

He further pointed out that most of the stimulus funds were spent quickly by Americans, leading to a sharp rise in demand without a corresponding increase in supply. This, he said, was a primary cause of inflation.

Ross also noted that the strength of the labor market was partly skewed by the surge in government jobs, estimating that about 30%-40% of post-pandemic jobs were related to government initiatives. He believes this distorted the true economic recovery.

The job market has since cooled as stimulus efforts have waned and the Federal Reserve has rapidly raised interest rates. Although many economists continue to argue that the economy is stable, investor sentiment is weakening. The former commerce secretary opined:

They weren’t building the economy. They weren’t creating supply of goods.

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