White House Sees Late Year Economic Rebound

Associated Press ^ | September 7, 2001 | none

[Man of the Right]

White House Sees Late-Year Economic Rebound WASHINGTON (Reuters) - President Bush (news - web sites) ``absolutely'' believes the U.S. economy will rebound later this year, despite a surprise jump in the nation's unemployment rate for August, the White House said on Friday. ``Absolutely he still believes that,'' White House spokesman Ari Fleischer (news - web sites) said when asked about administration projections that U.S. economic growth would recover later this year and into 2002. Fleischer also told reporters Bush opposes any new government spending to boost the economy, but had not ruled out asking Congress to make across-the-board spending cuts if needed to avoid dipping into Social Security (news - web sites) budget surpluses.

[Man of the Right]

I posted an economic story on the politics site, because excluding a major war, nothing will have greater impact on the conservative political agenda than how bad this recession gets and who gets blamed for it. First, are we in a recession? Yup. The Bureau of Economic Research definition: "A recession is a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income, and wholesale-retail trade." That sounds like a review of the years 2000-01. Second, how bad? Darned if I know. I do know the stock market, comprised of more Americans than voted in the Presidential election, is experiencing one of the most dramatic and extended bear markets in history. Over the last 18 months, NASDAQ has fallen faster than the Dow did in 1929-31. (We'll see what 2002 brings.) The S&P and Dow have been in a trading range for 3 yr., but are breaking down. $5 trillion in wealth has been destroyed. Third, who gets blamed. This is not George Bush's recession, but Bush and Paul O'Neill are quickly falling into the trap Herbert Hoover and Andrew Mellon laid for themselves through denial. "Business conditions are fundamentally sound." Right, Andrew. And: "Recovery is right around the corner." I hope you're right, President Hoover. But what if recovery ISN'T right around the corner? Remember the soft landing? Some soft landing. Effectively, President Bush has approximately five months in the life of his Administration to effect a visible, strong economic recovery. If the recession is still going during next year's Congressional elections, Republicans take the hit. If the Democrats win big in the off-year elections, as it now appears they will, the President will be reduced to a ceremonial head of state for his last two years. He still gets to proclaim Thanksgiving, but the Democrats make policy. If that happens, the odds are overwhelming he's going to be riding down Pennsylvania Avenue with Hillary or Al on January 20, 2005. For the duration, please keep a lid on the month-long vacations and lavish coverage of designer gowns and Cartier jewels at State dinners, Mr. President. And please propose follow-on legislation to revive the technology sector and to encourage capital formation now, not when you're a lame duck. If John "Trash the Pentagon" Kerry is proposing a capital gains cut, why not provide the leadership to make this happen? I wish you well, but it is very late in the day....

[RightWhale]

A recession is a significant decline in activity

My economic advisor says it is not a recession unless the economic growth is negative for 2 consecutive quarters. Economic growth has been reduced, but it is still positive growth. So by that measure, there is not a recession.

[KC_Conspirator]

My economic advisor says it is not a recession unless the economic growth is negative for 2 consecutive quarters. Economic growth has been reduced, but it is still positive growth. So by that measure, there is not a recession.

You are correct. The above assertion is incorrect. BTW, we will turn around by the end of the year, but we should still follow the house stimulus package.

[Man of the Right]

Two quarters of negative growth would take us into election season. Too late for Hastert, too late for Bush.

[RightWhale]

Two quarters of negative growth would take us into election season

The economic downturn was expected to last 2 quarters, which is about where we are now. Unless it continues for another 2 quarters, it won't impact the congressional races, and Bush's reelection season [should he choose to run again] is not due up for a couple more years. During the past 2 quarters American businesses have undergone rapid and deep restructuring, so if the economy begins to run more strongly fairly soon the businesses are in good position and the incumbents should be in good shape.

[KC_for_Freedom]

During the past 2 quarters American businesses have undergone rapid and deep restructuring, so if the economy begins to run more strongly fairly soon the businesses are in good position and the incumbents should be in good shape

I suspect you are closer than the doomsayers. There is still the possibility that a long term bear market will set in, but by early next year companies will rebound due to the favorable monetary policy, the velocity effect of the small tax cut, and the run down of inventories built up for Y2K. The companies are also working day and night on some new technology to trigger that "gotta have it" response that will sell more phones and chips.

[Man of the Right]

Hope, you're right. Bush is betting the farm on a rapid, strong recovery from whatever we agree to call current economic and market conditions -- the recession, the slowdown, the bear market, or bull market interruptus. He has advocated no follow-on legislation to reignite the economy if his advisers are wrong, as they have been consistently over the last two years. If they're wrong once again, Hastert is toast. As Poppy begat eight years of Bill & Hilly, there's the distinct unhappy possibility Dubya will begat eight years of Hilly and whomever is her significant other. Ellen Degenerate perhaps.