Billionaire venture capitalist Chamath Palihapitiya says the US economy is not doing so well despite glowing reports to the contrary. In a new episode of the All-in Podcast, Palihapitiya shares data suggesting that government consumption accounts for much of the growth witnessed by the economy in the last few years. According to the billionaire, the economy would be in a dire state if you take away government contributions. “If you back out the percentage of government consumption that is included in GDP, you start to see a very different picture which is that over the last two and a half years, all of the economic gains under the Biden administration have largely been through government consumption. What that means is that private industry has been standing on the sidelines somewhat. And that actually maps to a lot of this intuition that I’ve had over the last few months when I’ve said, ‘I think we’re in a low-key recession.’ Because what I could never figure out is why I would look at earnings transcripts of a bunch of companies who would constantly talk about softening demand… This is a broad-based softening as far as companies experience the economy but the high-level number is positive, which would make you think everything is fine. But when you look at that chart and you back out the percentage of the positive news that the government is responsible for, what it means is the economy is flat and the economy isn’t growing, which means that roughly there are a bunch of folks that are seeing contraction.”

Source: Chamath Palihapitiya/YouTube Palihapitiya says a country cannot keep its economy afloat by heavily relying on government consumption. He says the private sector will eventually discover and reject the “distortion” brought about by government activity. “It’s a very bad place if the economy is in the toilet, but we can’t even talk about it because there is no structural way to get an accurate read because the government just [distorts] the effect it has on the economy. You cannot have a nonprofit entity representing the plurality of the economic activity of a country and expect the capital markets to function properly. At some point, the capital markets will basically throw their hands up in the air and puke it all out and say, ‘No.’” Don’t Miss a Beat – Subscribe to get email alerts delivered directly to your inbox Check Price Action Follow us on X, Facebook and Telegram Surf The Daily Hodl Mix

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