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.

[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...