It might be the increased defense budget. With all the spending on defense, there is lots of job creation in this sector which creates consumer spending. Some kind of “unvolontary New Deal”.
That’s only an idea, I have no cite to back it up.
If it’s true, it’s on credit.
I read “the economist” webpage and they say its fueled on credit by the consumers who didn’t have nice tax cuts. Still they are willing to borrow on the cheap interest rates.
dutchboy208, I’ll bet this does not feel like Fall to you. Play golf? Ekana is a nice course, but I think they renamed it after receivership, or something.
Let me emphasize again, financial projections are just projections. If Bush has to spend more on “The Great Experiment in Iraqi Democracy” – spend it. There is no Plan B.
Furthermore, the tax cut is regressive. And, equally true, I would like it targeted at me. I’m not backing down an inch. 
Keep it simple. An one quarter economic change (is this q/q or y/y comparison), doesn’t mean jack squat. One has to look for a sustained improvement and there are so many variables that one quarter is statistically and economically meaningless. Now this may be the first of many quarters that show growth, but not a call that can be definitively made at this point. One quarter change is not statistically or economically meaningful, but that doesn’t stop headlines and WAGS.
Get back to Joe Sixpack and basics. He doesn’t give a flying anything about the economy. He cares about job creation, and job creation usually lags the economy by a long time. Bush the senior confused the economy with job creation, I’m thinking that Bush the junior is doing the same dang thing. If someone cynical were to look at economic cycles, impact of fiscal policy like tax cuts, and the expectation that petroleum prices would drop dramatically as soon as that Saddam regeim change came about, then you would expect that the election year should show a decent economic uptick. Maybe a cynic would think this was driven by someone looking at re-election. However, that pesky job creation that an awful lot of voters are concerned with most likely isn’t going to kick in until after the election.
Don’t know how relevent this is. But I’ve heard it remarked that a considerable portion of the spendable dough getting spread around on the consumer market is due to people cashing in on mortgage refinancing. I was working in this area as a drudge. A temp drudge. About 6-10 weeks ago, we were working feverishly, overtime anytime, 1600 units per day, grind grind grind.
Last couple weeks, been around 300, tops. So, if its true that re-fi money was a big portion of the loose cash running around the economy, well, adios to that. Plus, of course, that refund money is long gone.
Now, I am not much of an economist. What kind of science is it when everyone is always “stunned” and “shocked”? But it seems to me that if these two factors are crucial, then the party’s already over even as they open the champagne.
elucidator, interesting ancedotal evidence. No surprise as this is exactly what Greenspan intended when he drove down rates. Get people to refinance and the liquidity would spend the US out of a recession (or at least limit the pain). Wages shrunk, employment shrunk, but give home owners a cash boost via refinancing. That $10-20-50k cash in hand did a lot more to boost spending on big ticket consumer items than a couple hundred dollar tax rebate.
But doesnt the Fed Chairman serve at the pleasure of the President?
Clinton got credit for the fantastic economy that was a result of the dotcom boom, and GW is cleaning up the market correction from the bust. But Bill got credit for the boom, even though he had little to nothing to do with it, and GW should get credit if and when we pull the economy into rosier times.
There are still 2 problems with this :
If Bush doesn’t cut red tape regarding small and new business, and is still lax as he is in punishing criminal corporate behaviour, he could be one economic scandal away from being finished.
That would be justice, which is rightly reserved for the worthy.
I disagree because I haven’t seen any signs that personal debt ratios have changed. That would imply that the money made it’s way into the market.
It is my personal opinion that the GNP fluctuates exponentially in relation to the availability of money. If the cost of money increases than money will be pulled from the market to retire debt. If the cost of money decreases than money will be invested through credit which requires an inflow of dollars into the economy. Money is literally created by the banking system which has to borrow it from the Feds.
Reducing taxes should have a positive affect on the economy if it coincides with low interest rates. If you are trying to encourage personal debt reduction you would reduce taxes but increase interest rates. Bush did what any President would do, Dem or Rep.
Not quite. Each Governor is nominated by the President, confirmed by the Senate, and then serves a 14-year term. The Chairman is selected from among the Governors for a 4-year term - again, nominated by the President, and confirmed by the Senate. If the President is not happy with what the Fed Chairman is doing, there’s not much he can do about it until his term is up, at which time he can choose not to nominate him again. But even then, the Fed Chairman would return to being one of the Governors.
Magiver: Except he’s done it with remarkable, actually stupendous, incompetence.
Think about this (we’re going to assume for the purposes of this post that that 7.2% number is for real. Note that jobless claims are running in a pattern of negative revisions in 7 out of 8 weeks, a pattern noted, for those who need mainstream press confirmation, by Paul Krugman in today’s New York Times. (see this quote: “for the last month there’s been a peculiar pattern: each week, headlines declare that new claims fell from the previous week; a week later, the past week’s number is revised upward, and the apparent decline disappears.”): this quintessential bumbling fool has managed, as the aforesaid Krugman noted today, the truly hard trick of running a massive fiscal deficit and still managing to have a net loss of jobs for three years running. Let me be clear: by this time, it’s his fault. He’s been in power long enough, and he’s had a Republican Congress at his back the entire time. If he can’t get jobs created under these circumstances, he is flat incapable of doing it.
Oh, I don’t think the word is incapable. I think the word is uninterested. He would surely be OK with job creation so long as it went with his plan of makng things good for corporations and their shareholders, but it’s not his main goal.
There is nothing you can do with money that makes it not do diddly squat for the economy. If you put that money into the bank, do you really think that money affects nothing? Even if you set it on fire (the same as NEVER spending it) it affects the economy. (Bonus points: how?)
Bush shouldn’t get the credit for an improving economy, but much more importantly: he never should have gotten the credit for a poor economy either.
Paul Krugman’s articles are political in nature and are always written to be hostile to Republican polititians. If you wish to use him for purposes of discussion then I bid you good day.
At this time, first of all, that’d be good night, Magiver. Secondly, for the pattern of the job claims numbers, I cited a right and a left wing source, which I should think would be enough. As for the massiveness of the fiscal deficits, we have this:the debt to the penny, which, if you do the math, shows that in the first 30 days of this fiscal year, the total deficit was 77 billion dollars, or about two and a half billion dollars a day. I think that qualifies as massive.
And not a single job created. If you don’t like incompetent, how’s this: shameful. Truly shameful.
Tax cuts are an economic stimulus. There’s no ands ifs or buts about that.
The economy is cyclical in nature, and tax cuts are just one form of stimulus that was used.
Would the economy have recovered as fast without the tax cuts?
Probably they had an effect.
Would it have recovered without them?
Probably.
I don’t think anyone doubts that tax cuts and increased spending cause short term stimulus. However, over the long term you gotta pay t he piper.
Also, not all tax cuts are created equal and, as Krugman, William Gale (who Krugman quotes in his column), and others have pointed out, Bush managed to implement tax cuts in a way that maximized the negative effects on the deficit while minimizing the stimulative effects.
At any rate, I agree with those who say Bush shouldn’t be blamed for the dot-com bust and attendant recession. However, he should be blamed for implementing policies that didn’t do very much to help get us out of it while at the same time showering the rich with tax breaks and completely screwing the budget for years to come!
Does anyone think that this news, which leads most economists to think the economy is on its way to being robust again, is the beginning of a liberal retreat that sounds something like this:
Yeah the GDP is up, but where are the jobs?
(then jobs recover)
Sure jobs are up, but how about wages?
(then wages recover)
OK wages are strong, but interest rates can’t stay low forever?
etc ad nauseum…
Are the liberals unable to acknowledge positive economic indicators? To have a chance in 2004 will they have to continue to look for the the grey clouds in any good news?
The last part, if the recovery is robust:
“Corporations are raping us - their profits are obscene!”
“It’s a rich person’s recovery! The rich are getting richer, and the poor aren’t.”
“The recovery would have been even stronger if it hadn’t been for Bush’s tax cuts for the rich.”
There will be a renewed focus on ‘excessive’ corporate profits. CEO salaries will rise again, and that will kick off a new round of class warfare.
The Republicans would come up with reasons to bash the president as well if it were a Democrat. Hell, it’s an election year next year, and nine people are trying to be President. They need to come up with reasons. It’s a natural thing.