Economic growth, more jobs added, and fastest growth in a decade happened in the 2003-2005 timeframe. The economy was infull growth in 2004.
IF you take the LSD of extreme permabearism, any economic growth will look like a mirage. but it wasnt.
http://www.nationalreview.com/kudlow/kudlow200412300923.asp
“It’s been going on all year. The strong recovery got no respect during the presidential election, as John Kerry and his minions pounded President Bush for presiding over a “Hoover” economy. Kerry said Bush failed to create new jobs, even though traditional measures of economic health have been advancing nicely for two years. The media largely reported it the Kerry way.
Bush may not have been the most adept debater on the economy, but the facts spoke loudly in his favor. The most comprehensive measure of economic health — inflation-adjusted gross domestic product — has been trending steadily around 4 percent for the last two years. This is half a percent above the nation’s 3.5 percent long-run growth trend.
Meanwhile, the unemployment rate — which used to be the key election-year labor-market indicator — moved down from 6.3 percent to 5.4 percent, indicating strong U.S. work conditions. Then there’s the 2 percent inflation trend, a stat never mentioned during the campaign but a long stone’s throw from Jimmy Carter’s 15 percent rate of price increases.
Big media let Kerry get away with murder as he obsessed over non-farm payroll jobs, which were slow to recover but have in fact expanded by over 2 million in the past eighteen months. Nonetheless, the other major jobs report — the household survey — went virtually unreported.
The household measure shows a 2.5 million jobs gain during Bush’s first term and a whopping 4.2 million increase since the end of the 2001 recession. It’s a real measure, too: It gives us the unemployment rate. It also does not triple-count job gains or losses, as is the case with the payroll survey, while it does include self-employed workers and independent contractors, key parts of our new Internet-based information economy.
Then there’s the positive impact of reduced marginal tax rates. The Bush supply-side tax cuts were implemented early in 2003, in the wake of the 9/11 attacks, a burst technology bubble, and the corporate scandals. They caused an immediate jolt to the economy, as both employment and investment responded to a badly-needed dose of economic incentives. By taxing work and investment less, the economy got much more of both.
Here are a few simple facts. In the six quarters after Bush’s tax cuts, real GDP expanded at a 4.6 percent annual rate, much faster than the 2.5 percent pace of the six earlier recovery quarters. Consumer spending jumped from 2.8 percent to 3.9 percent. Business investment in new plant and equipment surged to 13.4 percent from only 1 percent before the tax cuts. Personal income jumped to a 5 percent growth rate, nearly double the earlier speed of 2.6 percent. The average employment gain (combining both surveys) was 2.4 million compared with virtually no gain before the tax cuts.
Corporate profits, without which businesses cannot create jobs, now stand at a record $1.118 trillion — 56 percent above their recession trough, 25 percent above the prior recovery peak of the late ’90s, and at a near-record 9.5 percent of GDP. Broad stock market averages have jumped 60 percent from their lows. Home ownership is at an all-time high, as are existing home sales. U.S. household wealth stands at a record $51 trillion.”
***“It’s been going on all year. The strong recovery got no respect during the presidential election, as John Kerry and his minions pounded President Bush for presiding over a “Hoover” economy. Kerry said Bush failed to create new jobs, even though traditional measures of economic health have been advancing nicely for two years. The media largely reported it the Kerry way.***
I’m not saying the economy didn’t look good and I’m certainly not saying the Democrats approach would have been better, but that doesn’t mean the fundamentals were strong.
***The most comprehensive measure of economic health — inflation-adjusted gross domestic product — has been trending steadily around 4 percent for the last two years. This is half a percent above the nation’s 3.5 percent long-run growth trend.***
And now what is it? It’s not as if the long term average didn’t also have periods of higher growth followed by lower growth averaging at 3.5%. I’m sure you could find many periods that had higher than average growth for 2 years. GDP by itself doesn’t tell me much anyway. If everyone suddenly went into heavy debt and spent all their money as fast as they could, GDP would rise, but would this constitute economic health?
***Then there’s the 2 percent inflation trend, a stat never mentioned during the campaign but a long stone’s throw from Jimmy Carter’s 15 percent rate of price increases.***
I believe the government seriously understates inflation. Partially because prices sure didn’t rise that slowly for me wherever I went. Besides, inflation isn’t really in the president’s sphere of influence unless he can somehow manipulate the fed.
***Big media let Kerry get away with murder as he obsessed over non-farm payroll jobs, which were slow to recover but have in fact expanded by over 2 million in the past eighteen months. Nonetheless, the other major jobs report — the household survey — went virtually unreported.***
You don’t need to convince me that Kerry and the media suck.
***Then there’s the positive impact of reduced marginal tax rates. The Bush supply-side tax cuts were implemented early in 2003, in the wake of the 9/11 attacks, a burst technology bubble, and the corporate scandals. They caused an immediate jolt to the economy, as both employment and investment responded to a badly-needed dose of economic incentives. By taxing work and investment less, the economy got much more of both.***
What got us out of the tech bubble recession (or more properly, what inflated the housing bubble to avoid the more severe recession we should have had in 2000ish) was the fed’s monetary policy. I’m not saying tax cuts are a bad thing, but they don’t have the same effect as monetary policy. Note I’m not in favor of monetary policy because all it does is put one recession and sew the seeds for the next, a drug addict getting another fix rather than taking the pain and then doing something productive that will bring him sustainable happiness. You can always get high from shooting up (injecting credit), but it doesn’t mean you’re healthy.
Personally I’ve never seen the huge appeal to cutting taxes without cutting spending. We’re told that we grow our way out of the deficits we create, but have we? I agree with you that increased spending is worse than lowering taxes, but the government is still taking in the same amount of money if you cut taxes and not spending. That means there’s still the same amount of money being sucked out of the economy for unproductive government projects that can’t be used by the private sector, and a future obligation to pay, plus interest.
***Consumer spending jumped from 2.8 percent to 3.9 percent.***
Is this necessarily a good thing? With total public and private debt approaching something like 360% and an extremely low savings rate, it would seem to me that we need to spend less. Yes this would cause slowdown but that’s what happens when you live beyond your means. The current recession is the market’s way of forcing us to do that. Economies should be based on savings, with consumption following production. What I don’t like about GDP is that it’s measured by spending. I think that has dangerous implications.
I’m not saying it’s all GWB’s fault or that the Democrats would have done better. I tend also not to give president’s credit for good and bad economies, as much of economic booms and busts are generated by the fed. I remember seeing a discussion once on another forum where the poster said that GDP growth under Democrats this century was higher than that under Republicans and that therefore we should always use Democratic strategies. I think this totally misses the point that the economy is not managed by the president, and ultimately, it’s Congresses legislation even if it comes at the president’s request. Just my 2 cents.