An essential premise of his argument is that real GDP can't decline if jobs are being added. So if jobs are being added, and they seem to be, then real GDP grow

An essential premise of his argument is that real GDP can't decline if jobs are being added. So if jobs are being added, and they seem to be, then real GDP growth must be positive. Real GDP growth is nominal GDP growth (4%) minus inflation, so inflation must be no more than 4% to keep real GDP growth positive. "Let's try a thought experiment. If inflation really is 10 percent, that implies that real GDP fell around 6 percent last year. How bad is that? That's roughly where the economy was in the first quarter of 2009. Basically, complete free-fall. And thanks to Okun's Law -- which relates real GDP and unemployment -- we can guesstimate what that would mean for jobs. A back-of-the-envelope estimate says that unemployment should have risen between 3 and 4 percent in that scenario. Instead, we added 1.899 million jobs in the last year." But of course jobs and production (GDP) do not need to grow in lockstep. This assumes that productivity is constant. If productivity is falling, then production could be declining even as the number of jobs increases. For example, if the star employee (say Steve Jobs) of your company (Apple) no longer works there, your company may still suffer a production loss even if several employees are hired to replace the star. This is a case where production can fall even as employment increases.