Analysts have upgraded the 1Q performance of the US economy to a fantastic growth rate of 3.8%. Oil prices may hamper 2Q economic growth, but the new GDP figures show that the US economy is chugging along excellently. With the recent figures showing a slight decrease in the debt, the growth aspect of the US economy is doing quite well.
Of course, the costs of regulation in the US are still too high, and labor costs continue to boom at an accelerating rate. In order to maintain our high rate of economic growth, we need to keep the size of government low, reform Social Security and Medicare, and make the Bush tax cuts permanent. So far the President has shown very little strength when it comes to standing by his domestic agenda, which is deeply troubling. Our rates of economic growth and unemployment are both doing quite well, but Bush doesn’t have the political savvy to capitalize on these numbers, and the media has been doing their best to talk down a booming economy. The White House needs to use these numbers to not only show the successes of their pro-growth policies, but ensure that those policies are continued in the future.
It’s amazing how the perception of the econmy is so disconnected from the reality. I suppose one could lay some of the blame othe fact that people will, for the time being at least, compare all economic indicators with that of the go- go 90s, but that can’t explain just how out of touch most people are with how solid the economy has been over the last two years. As an example, my in-laws, who are good people ( if a bit simplistic when it comes to politics), will insist that the economy is “horrible,” “awful,” etc., and then cite the very numbers that demonstrate that the economy is doing well! “Look at the unemployment rate!” they’ll yell. If I state that the unemployment rate is slightly better than the historical average, they just shake their heads. They should know better – I was just a kid during the 70’s and early 80s, they were parents. How does someone who voted from 1978-1982 think that this economy is “horrible?”
And is pre-emptive strike, yes, yes, yes there are things that could be better (especially the deficit). But if someone would have told me prior to 2000 that 1) the tech bubble would burst in such spectacular fashion; 2) major financial scandals from the 90s would become known and shake the investor class’s confidence; 3) we would experience anything close to 9/11; 4) gas prices would surge the way they have and 5) we’d be fighting a war of this magnitude, I’d have told you that there no way the economy could be a quarter as good as it is now.
Jerry, you’re right that the economy is statistically in pretty good shape, but a healthy economy on paper in the year 2005 apparently isn’t being felt by the average joes the way it was in previous generations. Historically low unemployment rates are of little value when well-paying manufacturing jobs are being erased and replaced with low-wage, no-benefit service jobs. Low interest rates save less money than high gas prices costs money for most people. Furthermore, I think people can see the writing on the wall with our towering twin deficits and the public pension fund deficit which is probably only a couple years away from being the next S & L scandal. Just as the late 90’s economy was a bubble propped up by the tech boom and corporate accounting gimmicks, today’s economy is a bubble fueled by massive deficit spending that will all have to be paid back by a generation competing with China and India for jobs. Not a pretty picture, and I think more people can see that than those likely to be bedazzled by 5% unemployment rates.