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.

[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 ...

[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 ...

[MeekOneGOP]

Sheesh ! Double-post ... sorry.

[Rokke]

Actually the rate of change in the price of health care is almost right at its ten year average. The factors measured by the Consumer Price Index to measure the rate of inflation don't change from year to year. "They" don't add or remove things to manipulate inflation figures. "You" may be manipulated by the media to believe some things are rising at abnormal rates (healthcare, housing etc), but that is because the media has an agenda to manipulate your thinking. The CPI does not.

[fortaydoos]

There are MILLIONs of new jobs being created. Unfortunately for the average American, these jobs are in China and India.

[GatekeeperBookman]

Unemployment is THE problem-'outsourcing' is a major factor. Here is part of 'why' it occurs.

From:http://www.freerepublic.com/focus/f-news/986807/posts Us Jobs: Next Stop, India

Are people on this board actually suggesting that the Imperial Federal Government step in and tell private enterprise who they can and can't hire, what they can and can't do with their own businesses?

Is this the Free Republic spirit?!

Overseas outsourcing actually spares American jobs as it allows a business to continue to exist in the international marketplace by shopping out certain non-local functions, as opposed to this firm simply going out of business due to an inability to compete.

The TRUE source of this outsourcing trend are such things as:

a. Minimum wage laws
Which drive up the cost of goods and service at every level of the supply chain.

b. Restrictive mandatory daily overtime laws
Which force companies to hire unnecessary, costly employees due to the fact that the current workforce is not allowed (under law) to fill in certain shifts.

c. Paid Family Medical Leave legislation
Which makes it very costly financially and managerially to employ American workers.

d. Confiscatory levels of taxation
Which create unnaturally high consumer prices, forcing companies to cut fixed and variable costs at any and every level

What we need is much LESS governmental meddling in the affairs of private enterprise and the employees who drive this nation's economic engine.

Outsourcing to India is but a symptom of a very large government-induced problem.

Pure, free-market capitalism is the most moral and ethical economic system, as it distributes the largest amount of goods and services to the largest number of individuals in the shortest amount of time, and compensates people at all levels for doing so.


20 posted on 09/21/2003 9:46 PM PDT by Bryan Resheske

[GatekeeperBookman]

The unemployment is also agrevated by low business investment. IMHO. Please tell me I am wrong-but this problem is not being fixed.

[GatekeeperBookman]

I'ld rather see him on any of two dozen Valley highways ( in South Texas ) seeing with his own eyes, the awful wave of illegals who camp there.

The citizens of Texas must feed, water, clothe, shelter, educate & medicate these 'throw away' children of Fox.

We have a flood of Third World Barbarians & never-to-be-assimilated criminal aliens: & WE pay the taxes of the mexicans who stay put! Why is Kalifornia broke? They spend vast fortunes on what? Criminal aliens who don't pay squat!

[null and void]

Well said/quoted...

[null and void]

Courtesy ping - see post #55 and reply.

[Starwind]

All the factors you cite are true contributors to the burdens on business.

Businesses further undermine themselves with overemphasis on short-term profits and share price growth (often through accounting gimmickry), while de-emphasizing quality, operational effectiveness, and customer satisfaction.

That and an overall myopia.

All brought to you by graduates of Ivy-League B-Schools.