The Bush Boom

Wall Street Journal (Subscription) ^ | September 15, 2003 | Brian S. Wesbury

[Straight Vermonter]

President Bush has sounded upbeat about the economy of late: and he should. His tax cuts and Fed rate cuts are proving naysayers wrong. Not only did the economy grow at a stronger than expected 3.1% rate during the wartime second quarter, but the third and fourth quarters are on track for what could be 6.0% real GDP growth.

Retail sales show a 12.1% annualized increase in the June-August period. Housing starts are at a 17-year high, new and existing home sales have set new records this year, and disposable personal income is up an annualized 9.4% in the past three months. Productivity growth in the non-farm business sector expanded at an astounding 6.8% in the second quarter, while spending on computers and peripheral equipment jumped 57.5% at an annualized rate. The future looks just as bright. …

Under the radar screen, high tech is making a serious comeback. … Even in the services sector -- which many thought immune to efficiency gains -- productivity is rising. With it, incomes and profits will rise, setting the stage for a strong economy and equity market in the coming election year. …Yet these productivity gains have created at least one problem. Gains in efficiency are one factor undermining job growth in this recovery when compared with those in the past.

In late August, the AFL-CIO issued a press release titled "U.S. Workers Struggle in Worst Job Slump Since Great Depression." They said this with a straight face even though, at that time, the unemployment rate was 6.2%. In the Depression it was above 20% and in the early 1980s, at the height of union membership, unemployment was 10.8%. … While manufacturing output has held steady as a share of GDP, manufacturing employment has fallen from 25% of all jobs in 1970 to 11% today. …

… creative solutions are allowing small businesses to succeed despite extraordinary obstacles. In fact, they are creating jobs while large businesses are eliminating them. We know this because there is a big divergence between the two surveys of employment run by the Bureau of Labor Statistics. According to the Establishment Survey, non-farm payroll jobs fell by 93,000 in August, creating a total job loss of 437,000 for the first eight months of 2003. …

The BLS also collects data directly from households … This data is used to calculate the unemployment rate, which fell to 6.1% in August from 6.2% in July. Interestingly, the Household Survey shows that 1.186 million new jobs have been created this year. …

In the end, the jobs picture isn't as good as it could be, but not as bad as demagogues or some data suggest. Virtually every sector of the economy is booming today, especially high-tech. Weak job growth is an anomaly and cannot last.

With the capital gains tax rate lower than at any time since 1941 and dividend tax rates cut by 60%, the 2003 Bush tax cuts have stimulated venture capital investment, mergers and acquisition activity, and the stock market. … So while partisans will continue to produce pessimistic analyses, there should be no doubt that this economy is gathering momentum. The strength of economic activity will surprise many, just as it did in the early '80s following the Reagan tax cuts. George W. Bush should get the credit this time.

[Straight Vermonter]

I was surprised that this week old story had not been posted by the Bushbots.

Good news if true.

[Recovering_Democrat]

...the third and fourth quarters are on track for what could be 6.0% real GDP growth.

Tom Daschle is saddened, deeply saddened.

[proxy_user]

No one can tell what is really happening. The economy is changing so much, that it will be possible to tell what is happening only in retrospect.

That's why the comparisons to the Depression are meaningless. We were a completely different society, and economy, then.

[bushfamfan]

To hear the media and Demonrats tell it, you'd think our economy is destroyed. Of course there's the job problem, but funny how the Demonrats want to raise taxes on the very people who are the employers and it needs to be pointed out repeatedly because they offer up nothing but insanity and rhetoric.

[Uncle George]

And with the Commie owned media we will have to read it in the Wall Street Journal in fine print.

[Rubber Duck]

Note to news media-- the economic doom and gloom stories have just a few more months to play, then you'll have to find drug addicts and winos on the street to orchestrate criticism on how tax cuts are cutting the safety net for the most vulnerable members of society.

[YaYa123]

Thanks for posting this.

My husband tells me this is why the democrats have decided they must go after President Bush with renewed vigor on the war, and national security, and why Kennedy went beserk last Thursday.

Bush's economic plan is working = political death for Democrats.

By the way...I was in an AOL Bash Bush Chatroom the other day. They aren't even clever enough to know the term "Bushbot", they call us Bush Robots. I'm not insulted by either. In fact, I take "Bushbot" as a reminder to hold fast to the reasons why I voted for Bush. So many times I've faltered...oh me of little faith. But I know it happens to the best of us when we ingest too many pundits and pukes.

[Orangedog]

I'll start having faith in growth figures just as soon as these rocket scientists acknowledge the real level of inflation. Everything I spend money on has gone up. Groceries, electric, cable, phone, internet, pizza...just about everything. And don't even get me started on what cigarettes cost these days.

As far as the tax cut goes, every penny of mine was transfered to higher property & sales taxes and car/home insurance rates.

[boomop1]

What does the NY Slimes have to say about this, nothing I suspect.

[YaYa123]

You're right, none of us non-experts know what's going to happen with the market or the economy. Indicators? I hardly even know what that means, but they are astoundingly good right now. Wish I knew more...I just listen to my husband, try to understand the FOXNews Saturday morning money shows, watch Neil Cavuto.

Louis Rukeyser's Wall Street" airs at 8:30pm est on CNBC.
(Husband translates this one for me.)

[BushCountry]

I think the BushBots are sick of the DoomGloomBots.

[Rokke]

So let me get this straight...when the prices of everything start going down, you'll believe we're in an economic recovery?!?!

[Jeff Chandler]

George W. Bush should get the credit this time.

Don't hold your breath.

[bluefish]

Guess what... you know as much as your husband does. Take it from an economics junkie, former short term trader, former investment broker (who refused to accept the fact that it was just a sales job).. you know and understand what is going on, and maybe even better what WILL happen, than your husband. The "experts" don't really know. They only "interpret" the past.

[Orangedog]

Did I say that?....No. I was commenting on the fact that almost every economist and his brother says that there is almost no inflation when prices for most things are rising considerably. The Fed is not seeing (or admitting) the inflation that is taking place.

[maui_hawaii]

I hope it gets better too...

The only thing to talk about though is jobs.

They can quote 10% growth yada yada...and that doesn't equate to jack. Until it puts money into my pocket the economy is still bad.

[zencat]

I'd love to see GDP growth at 6% for the second half of the year. Even the liberal media will have trouble trying suppress that kind of good news. Such growth should lead to solid improvements in the labor market.

For those that say we can't know what will happen, while of course that's somewhat true, it can also be a cop out. We can make highly educated guesses by following stock markets and leading indicators. All those signs currently point to much improved economic activity in the near future.

A booming economy next year will likely reduce the Democrats chances to zero.

[SierraWasp]

"And don't even get me started on what cigarettes cost these days."

That has NO relationship to inflation whatever!!! That's politics, litigation and Liberal GREED!!!

[Rokke]

Actually, everyone (including the Fed) is saying the current rate of inflation is just over 2%. However, the price of most of the products you listed have little to do with the rate of inflation. Cable fees are driven as much by supply and demand and competition as anything else. Cigerettes are being taxed into the next dimension. Utilities are cyclical and driven by the cost of natural resources. In many cases prices are coming down. Especially electronics. In fact, with the exception of cigerettes, I can't think of anything that has become dramatically more expensive in the last couple years.

[null and void]

Good news if true.

Dunno if it's true, but I've recently managed to get a few small consulting gigs after a full year of NOTHING.

I even got paid for one.

;^)

When I went to get a haircut Thursday, it was a bit humbling when the woman ahead of me opened her wallet to pay and I saw that she had more money in her billfold than I've earned and been paid this year.

Still, anything is better that nothing!

I fear of jobs don't come back Dubya WILL be a one term President...

[null and void]

By the way...I was in an AOL Bash Bush Chatroom the other day. They aren't even clever enough to know the term "Bushbot", they call us Bush Robots.

I suppose it's better than Bush Licker... YIKES!!! Did I mash "Post"?!?!

[freeparoundtheclock]

The Florida freepers are too busy trying to save Terri Schiavo's life. She represents the slippery slope of providing euthanasia services to disabled Americans instead of simply terminal patients. It's happening in Pinellas County, FL. She is technically disabled and will be killed.

Anyone who wants to help Terri Schiavo who's set to be starved to death beginning 10-15-03 at 2:00 p.m., please ping kimmie7 to get on Terri's Ping List.

[freeparoundtheclock]

Joe, this thread needs your Bushbot jpeg at your convenience of course.

[Diverdogz]

I'm telling you, it really is hard to tell what the economy is doing here on the Emerald Coast of Florida. Lots of people are jobless and many are making much less then they had previously, and yet, brand new condos are being erected and are selling like hotcakes - all in the $300,000 range.

Can't help but notice all of the Mexicans working as construction workers. I don't know if they are illegals or not, but the work is getting done. The general contractors manage these projects very carefully and won't put up with slouch workers.

So, what is happening here may be an anomoly - if people decide to forego more expensive vacations, it could actually be a boon for the Emerald Coast as this is a great place to come, but a much less expensive vacation option than the Carribean or even South Florida.

[ovrtaxt]

What are your talents? Start a business. Mine is doing VERY well right now, and I employ a few others along the way.

[gooleyman]

"As far as the tax cut goes, every penny of mine was transfered to higher property & sales taxes and car/home insurance rates."

-

Just as an organization rots from the top, it also heals from the top. My meaning: Now that we have someone who who is actually reducing taxes at the very top of Government, it is also time to start electing people who will reduce taxes at the State and Local levels too. I get into this with my wife all the time. President Bush has nothing to do with Local taxes going up. Get those liberals out of your local Government and elect some Conservative who will not raise taxes as a first resort. Do you think if the Federal Government raised taxes, that the Locals will reduce them or leave them unchanged? Think again. That's just an excuse they are using to raise taxes. In fact, to a liberal, any excuse is an good one to raise taxes.

I know first hand of what I speak. My town is so far Democrat that at primary time, out of about 40 voting booths, only 3 (three) are reserved for the Republican primary.

[ATOMIC_PUNK]

Film at ..... er wait a minute this is good news?

ok joe recall the film crew and find that kid that got stuck in the drainpipe last year we need more gloom and doom

Damn that bush and his tax cuts

/sarcasm off

BuMpS Up

[eldoradude]

Cigarette taxes are high so that meathead's loser friends can make a lot of money making a bunch of stupid ads that lie about smoking.

I don't pay Calestinian cigarette taxes. I make my own...fresher, I pack them as tight as I want to...and I get real flavor, not some mass marketed tasteless crap in a tube.

[Samwise]

and why Kennedy went beserk last Thursday.

Minor correction. Ted Kennedy went berserk many, many years ago.

[maui_hawaii]

When the time is right I will definately start my own.

As for what my education/talents are...I speak, read, and write Chinese and can translate up to level 3 (out of 5).

I have studied and worked in international management. (I reported directly to the regional CFO of a American big corporation in Asia)

I currently do banking and other financial services stuff.

[ovrtaxt]

Wow, that's impressive. I'm just a lighting designer. You could make your own economy!

[maui_hawaii]

None the less, its not a boom until the job market reflects it.

[NYC Republican]

bump for later read

[maui_hawaii]

Right now I essentially would analyse the heck out of a company and tell them "you've been losing money and marketshare"...

They knew that before they hired me...

Seriously though, I do have my own thing in the works...When the time is right I will.

Based on my experiences though going into business isn't a walk in the park. Especially for the kinds of things and the kinds of people I work for...

[Ciexyz]

Gee I didn't read any of this good news in my liberal local paper.

[Reagan Man]

With the US economy making larger gains then expected in GDP growth and more posiitve economic numbers overall, the Demlibs will have to concentrate more on discrediting the President with the war in Iraq. I don't see that working either. As daily events become less chaotic in Iraq, the Demlibs will have to think up something else to attack the President on. This is a never ending cycle for the out of power crowd.

[Conservomax]

It is true. The numbers are accurate, even the bad part about job growth which will be harped on by the dems come 04. The economy could have record growth in 04, but the press and the dems will still say it is like a depression which will be a bald face lie. Too many people will believe it though.

[Conservomax]

Cigarettes are so expensive not because of inflation, but taxes. why? Because it is a neuvo social ill. Smokers are being viciously targeted by the nanny sate for their addiction when junkies get free needles and methadone. It is shameful.

[Conservomax]

Jobs are always the last thing to turn. Businesses need to be making money for people to be hired, That can only happen if consumer spending goes up, which it has - once the labor market gets tight, a boom happens, everyone has money, inflation goes up, then interest rates, then people stop spending money, businesses start to lose and people get laid off.

That's life in a cyclical economy.

[null and void]

None the less, its not a boom until the job market reflects it.

True, but job creation is late in the cycle. Employers are reluctant to create new jobs until they are sure they will last. It's painful to lay people off if it's a temporary blip. Instead they'll work the survivors until they can give no more - and the survivors, having had their shoulders recently brushed by the wings of the Angel of Economic Death, will work very hard inded to save their jobs. (They all know former co-workers how haven't been able to find a job in months/years).

Many jobs AREN'T coming back. EVER. But there will be more jobs created, some pretty good, some pretty minimal

The big question is will it be in time to save Dubya? If not, we are all in really big trouble...

[maui_hawaii]

The big question is will it be in time to save Dubya? If not, we are all in really big trouble...

Exactly my sentiments.

[Mulder]

Actually, everyone (including the Fed) is saying the current rate of inflation is just over 2%.

Isn't it interesting how they can make the case that there is no inflation by simply not counting the items that have seen significant inflation (such as houses, medicial care, college, etc....)?

[maui_hawaii]

Its a chicken and the egg question...somewhat at least...

Do you have a boom because employment is good, or is employment good because of the boom?

[Jeff Chandler]

They can quote 10% growth yada yada...and that doesn't equate to jack.

Industry is still a bit gun shy after the recession. At some point they will confident enough to start hiring. It won't be like the dot com craze, though. That was a "gold rush" mentality.

[Conservomax]

Good question, what exactly is a boom? I think it is a term used by the media when everyone is happy and there's a democrat in the white house.

[Jeff Chandler]

Start a business. Mine is doing VERY well right now...

Same here. I have a full time-plus overtime-job AND a sideline business that is starting to catch on fire. Between work and homeschooling my daughter, I have hardly a moment to spare for Freerepublic!

[JasonC]

Believe me, if 6% real growth actually happens and is sustained over 6 months or more, you will be able to tell. That is a monster rate for anything more than a 1 quarter blip.

[JasonC]

No, it is definitely the latter. Boom first, then jobs. Labor lags on the upswing; always has. People first managed to do more with what they have and find useful things to do. Then they can't keep up and need more people to do them. That's just the way it works.

[Joe Brower]

[MeekOneGOP]

I was surprised that this week old story had not been posted by the Bushbots.

Good news if true.

Hey ! I resemble that remark ! :O)

I also heard on the radio LAST Monday (9-15) something about advertising revenues (Advertising Index??) being up, which was supposed to portend future job outlook/growth getting better. That is great news also ...

November, 2004:
President Bush on the Road to Victory ...