From a recent post at National Review Online, by Jonah Goldberg:
The stock market is at an all-time high, thus
Retirement accounts are at last recovering.
Unemployment is at a 25-year low,
Taxes are at 20-year lows,
Federal revenues are at all-time highs,
The Federal deficit is down almost 50%,
Real estate values have soared,
Inflation is at a 20-year low,
Considering the stock market crash of 1980, I’m impressed by all of the above, but I think that #3 and #8 are especially great for middle class Americans, working families, poor people or whoever it is you care about. And I think that this administration deserves some credit.
But I’m imagining that there are a few libs who feel that this is wrong or misleading. Perhaps the crucial data is missing, for instance the moving average of the ratio between the highest and lowest deciles shows that the fat cats are outperforming the recent immigrants by 1% more than they did in 2000. I don’t have the resources to look it up. Or you might say there is no correlation between who the president is and how the economy does, despite numerous posts about the Clinton boom years and how Bush destroyed the economy in his first few days in office.
So let’s debate: How’s the economy and who gets credit or blame?
I agree with you that the economy is doing fine. Personally, I credit the Fed, but I’m not very well versed in these matters. Furthermore I’ve never really had it satisfactorily explained to me how the president even effects the economy, let alone takes credit or blame for the state of the entire thing. Sure the stock market might hiccup at something the president says and his stance on taxes and government spending might have a small effect here or there, but the Federal Reserve is the organization charged with keeping the economy in reasonable balance, and from my meager understanding of it, they do a pretty good job.
Edit: I want to add that Congress has a pretty big effect too. Taxes and government spending are huge pieces of the economy, but all the president has is influence there, not any real power.
As for inflation, one can probably credit the Fed. At least, in the post Volker fed era (eg Greenspan), the Fed has been an inflation hawk. In other words, keeping inflation in check was a big priority.
As **bosda ** points out, good news the economy is great, bad news everyone is bankrupt.
Basically, we’ve had another bought of supply side economics (aka voodoo economics and bonus points for the namer of that). And Supply side economics has a seriously shit track record for the long run. The Reagan era and the Japanese bubble being two examples.
Definately need to point out the “federal deficit is down 50%” compared to what? This phrase is horribly misleading. the Federal Deficit is close to $9 trillion, which works out to about $30,000 per person. Did you know you owe $30k extra to Uncle Sugar? Go straight to the source and the congressional budget office
Long story short, some of these very selective but high profile economic indicators show everything is great. Bad news is that the US is mortgaged to the hilt to get those rosy indicators. Maybe you live in a big house with a pool, and drive a BMW, but your credit cards are maxed out, mortgage was refinanced so you’ve got about $1 in equity, have zero savings and only thing keeping you off the street is your job.
I think we don’t pay enough attention to the trade deficit with China, or to the budget deficit. I don’t see any clear indication that tax cuts helped the current economy, but they sure put us in a bad position for the Iraq war/war on terror.
We also haven’t paid enough attention to the abuses that have come out of the recent economy, especially the Enron-type scandals.
On the other hand, I don’t panic about the economy that much. Dire predictions of what would happen to the US (or anywhere else) in the future have mostly not come true. The skyrocketing price of oil may be forcing us all to be more efficient and more in tune with our environment. Japan hasn’t taken over the world. We haven’t blown each other up with nukes (so far). Some economists would well argue that the best thing the government can do for the economy is avoid touching it too much.
Before I get started, Plan B, care to answer why you feel the need to sneer at liberals in the very first post of the thread? Can’t you wait until someone actually says something you don’t like before starting the bashing? I mean, there’s no rush, really.
Well, let’s see, concerning the list, for 1), the stock market has been at all-time highs lots of times in its history. Isn’t that what it’s for, capital appreciation? If it happens to be well off those highs next summer, is that just as meaningful as its current condition?
For 2), yeah, I suppose they’re recovering because a lot of retirement funds these days are equity-based 401(k)s. From 2002 to 2004, IIRC, my 401(k) gains were negative; the gains of the last two years give me an average return of about 5% over the entire period, big whoop. Anyway, I read up on HR matters quite a bit, and the thing that really concerns me is how little most people are actually saving for retirement, and thus how little they are actually going to have to live on at retirement, or how long they are going to have to defer that event. Full disclosure: I’m pretty much in the same boat. I, and a lot of people I know, appear to be on the road to cat-food dinners in a few years.
3), 4) and 5): good things, assuredly, assuming (and this is a big assumption) taxes and revenues are being used exactly as they are needed and for constructive purposes. 5) especially, since this administration has been burning so much cash in Iraq, amongst other adventures, that they might as well have been loading up boats with it and sinking them in the Persian Gulf. Which brings us to…
6): The deficit is down, you say? it’s only half of what it was a few years ago, when it apparently was the highest in history? How lovely. Er, wasn’t it a whole lot lower before this administration took office?
7): Real estate values are soaring right now? Everything I read lately indicates they are down in most markets. Am I wrong here?
8): A good thing; I think the Fed gets credit for it, as relatively low inflation has been the norm since at least the 70’s, near as I can tell.
In summary, 1-3, I don’t know who gets credit but I’ll need to hear the OP’s argument on why the administration deserves it before deciding, 4-6 definitely some credit (or blame) to the administration; 7) false without more details explaining what time period the statement refers to; 8) the Fed, as stated previously.
Median income for a household of people of working age has fallen five years in a row. I got that from Mortimer Zuckerman’s column in US News & World Report, a publication not exactly known for its liberal perspective. Says Zuckerman:
And the response of Bush and the Republicans in Congress has been to protect the credit card companies (!!) by making it more difficult for consumers to file for bankruptcy. :rolleyes:
The stock market is almost always at an all-time high, as it increases every year unless the economy is total crap. If we are to give partial or full credit or blame to this administration (as you do), then let’s look at the 6 years in retrospect, and compare to previous 6 year periods, to see how the market grew. I’ll use the DOJ for this, as it’s a pretty standard measure that everyone is aware of.
Here is the close for end of December for several consecutive six year time periods.
Based on that, if we want to give this administration credit, we could always say “At least they outperformed Carter”. That should play well with the base.
I’ll conceded that they aren’t quite in the shitter like they have been, but they’re little more than stagnant as compared to six years ago. Under strict definitions of “recovery”, it’s true that we are getting there. Of course, “the stock market no longer sucks quite as much as it did” isn’t what we’re looking for in an economy that is “doing great”.
Since it’s not actually true, I guess we can give credit or blame wherever we want. Instead of spending a ton of time, we’ll just prove it’s a lie and move on. For December 2006, the unemployment rate (not seasonally adjusted was 4.3%. It was at 4.0% for the entire year in 2000, and 4.2% in 1999.
I’m not even going to bother validating this one, as without a balanced budget, that tells us nothing. If I pay the minimum on my credit card bill, instead of paying the balance in full, I’ll have more money in my pocket. Today.
Other than 1958 and 1971, I can’t find a single year in the past 50 where the year’s numbers weren’t at an all-time high. Well, except for 2001, 2002, 2003, and 2004.
Not everyone considers that a good thing. Many believe that a lot of this is due to newer (and riskier) loan types, such as interest only loans, which have allowed many to spend far more for a house than that could have in the past.
Are you also willing to give them credit for things like record deficits, triple year depressed revenues, etc?
As demonstrated above, yes.
You do now, as I provided links above.
This is actually about the only thing I find worthy of debate in your entire OP, since most of the rest was based on BS, and unfortunately, I don’t have a factual answer to this. I think any given administration has some effect on the economy, but how much probably varies by what they do and don’t stick their hands in, which naturally will vary from president to president.
Yeah, those horrible Reagan years, which started with inflation and interest rates hovering around 20%, ‘malaise’, the ‘misery index’, personal tax rates as high as 70%, a military seriously underfunded and lacking morale - and which ended with a roaring economy, low inflaton, low interest rates, a strong military, high levels of optimism, consumer confidence, and personal marginal tax rates less than half of what they used to be.
In 1980, US Gross Domestic Product (in constant year 2000 dollars) was $22716. By the end of Reagan’s term, it was $27578 - A huge jump in 8 years. Gross Domestic Product jumped from 2.8 trillion to 5.1 trillion. Numbers that absolutely swamp a 200-400 billion dollar deficit. By 1988, the annual difference in economic output was bigger than the deficits accumulated in all of Reagan’s years combined.
What a disaster.
Speaking of horribly misleading… The number you cited is for the national debt, not the deficit. A debt that has been growing since WWII. However, the proper number to look at is the debt as percentage of GDP. A person making $100,000 with a debt of $10,000 is much better off than a person with an income of $20,000 and a debt of $5,000.
The national debt is currently sitting at about 60% of GDP - right about where it was at the end of Clinton’s first term. There was a major reduction in debt/GDP ratio in Clinton’s second term due to an economic bubble and honest fiscal restraint, and I wish to God Bush had continued with some fiscal discipline, but this is a far cry from saying the country is bankrupt or that the U.S. is going broke. From this list of debt/GDP ratios, the U.S. is in 34th place, with a better ratio than France, Germany, Belgium, Italy, and Japan.
I don’t like big debts or deficits, and I think the U.S. government spends way too much money. But a little perspective is needed.
One of the reasons savings are so low is because of a bigger social safety net. You don’t need to save for retirement when you have social security. You don’t need to save for health care emergencies if you have health coverage. You don’t need to save to keep you afloat between jobs if there is good unemployment insurance.
Another factor is personal wealth. Personal wealth in the U.S. has grown by 24% since 2002 - driven mostly by an increase in home prices. Home ownership is also at all-time highs. More and more people are planning to use the equity in their houses as part of their retirement strategy, meaning they are pouring money into capital investments instead of savings.
Another reason for the drop in personal savings is purely demographic - retired people don’t save money, they spend it. Savings rates are calculated by substracting savings from income. Retired person’s income was realized a long time ago. Now they are spending it. As more people retire, expect to see the savings rate go down even more.
Another reason is that the calculations for savings rates exclude capital gains. So in an era of large capital gains, expect to see other types of savings decline.
The U.S. is not unique in this. Canada’s personal savings rate is zero or even slightly negative. Another way to look at it is less ominous - some economists feel that the savings rates have dropped in Canada and the U.S. not because of the various administration policies, but precisely because we have such strong economies and so much growth. People don’t feel the need to save as much when the economy is strong, unemployment low, incomes increasing, and overall wealth increasing. It’s a measure of confidence just like consumer spending, only this confidence is for the long haul.
Well, isn’t the stock market often at an all-time high. The general trend in stocks is up…so it is only for the first few years after a major correction that all-time highs aren’t being set pretty regularly. We are also talking about the Dow. I am not sure if the S&P has made it back to its 2000 (2000?) high-water mark and I know the NASDAQ hasn’t.
Not sure where you…or he…get this from. It looks to me from here that the unemployment rate was lower in 1999 and 2000.
Probably true…at least of federal taxes…in percentage terms.
Well, this, like the stock market, is a sort of thing that always trends up in time as the economy grows and inflation increases. In real terms, the tax cuts under Bush have resulted in a significant drop in revenues that is taking several years to recover…just as the Reagan tax cuts did. (I believe we are still below the revenues in 2000 in real terms, and almost certainly so if you take social security revenues out of the mix and look just at income tax revenues.)
Well…that was after skyrocketing from a ~$150 billion surplus in 2000. [Also note that this statement is true of the “deficit” measured with the inclusion of the surplus from social security. If you look at the larger deficit excluding the social security surplus, it has fallen less in percentage terms.
Well, that seems to be cooling off now.
Look, I am not saying the economy is doing badly. However, it is not as good as made out to be here. And, of course, this economic growth was purchased at an enormous price…hundreds of billions of dollars a year in deficits. I can make my personal economy look pretty good for a while if I go out and buy lots of stuff on my credit card. But, eventually, it catches up to me.
Of course, the real concern is not growth in personal wealth, but growth in median personal wealth. Otherwise, all those boons Bush handed out to the super-wealthy skew your results. (The rich getting richer while the middle class stagnates is nothing for the US to brag about, you know.)
The most recent stats I find on change in median wealth are from 2001 to 2004. For that period, any gains in home values were mostly eaten up by increased debt:
So, in the socialist US of A I can spend like a drunken sailor but that’s okay because my retirement is taken care of, health care is covered, and if by chance my job gets outsourced to India insurance will keep me from becoming a manager at McDonald’s. Whew, glad that’s settled then.
I couldn’t easily find numbers showing home equity trends, but likely the % of equity owned has dropped dramatically. The home equity as retirement strategy only works if one actually **owns ** the equity and/or housing prices continue to go up much faster than inflation (which is a bit tricky since housing costs are a big part of inflation :dubious: ).
1 and 3 are flat-out lies.
For 1, the broad measure that the market is usually measured by and that mutual funds use as their benchmark is the S&P 500. This is lower right now than its all time high back in the bubble years. The all-time high was somewhere to the north of 1500, and right now we’re resting in the lower half of the 1400’s. I can rustle up the exact figures, if you feel like disputing this. Note that this wouldn’t even take account of the effect of inflation.
For 3, this was reached under Clinton, not now.
The National Review is not a place to get reliable data about the economy.
A couple months ago the LA Times did a study on Calif. unemployment. They determined it to be 50 % under reported. The 4.2 was more like 6.3 and California has been a hot market. Try the mid west . After your unemployment runs out you are off the rolls. Millions have exhausted theirs . The Federal Government always under reports it ,to create the idea the economy is better than it is. The huge bankruptcies are in spite of the fact they passed laws making it more difficult to do. Much of the boom is smoke and mirrors. The middle class has been slaughtered the last 6 years.
Jonah Goldberg? Luciannes little baby boy, the same one who has been dead wrong about everything for the past several years? Seriously?
I’ll admit to being somewhat unsophisticated about macro economics. But it seems as though we are meant to gasp at the brilliance of our leaders, who sagely see the wisdom of simultaneously squandering a gazillion dollars on a futile military adventure while cutting taxes. Makes about as sense as rendering everything into cash, piling it in your living room, burning your house down around it, and then buying a new house with your credit card.
This wouldn’t make sound economic sense to an artichoke.
For any country, you can find hundreds (possibly thousands) of economic indicators and statistics. People who want to paint a good picture will mention the indicators that fitt hat picture. People who want to paint a bad picture will do the opposite.
Sometimes, different sources give different figures for the same indicator, and people can debate which figure is the more accurate or useful. Sometimes, the way in which a given figure is calculated is changed, maybe when administrations change.
Some statistics are compiled honestly and give us meaningful information. Others are flawed because of the bias, subjectivity and inaccuracy that plague many human endeavours.
Some statistics are relatively up to date. Others may look contemporary (e.g. “a report published in 2007”) but in the small print you find that the most recent figures involved come from 2 or 3 years ago, as the more recent numbers are still being crunched somewhere. In other words, the stats lag behind time.
Some statistics are ‘snapshots’, and are only intended to make sense when you take a very short-term view. It makes no sense to extrapolate them over a longer period of time. Some statistics are ‘long-term trends’. They only make sense over a long period of time.
All in all, statistics about the economy show you whatever you want them to show you.
Yes, but in this thread, we’ve used the indicators that Goldberg has provided to prove him wrong, not cherry picked our own to make it look even worse.
Statistics need to be put into context. When we ask “is the economy better?”, better at what? Beter than what?
Meeting the needs of it’s people?
Distributing resources?
Is it healthy and sustainable?
Overall, the economy is good. But is it good for everyone, everywhere? Probably not.
