Why Isn’t Bush Trumpeting the Economic Boom?

Larry Kudlow asks an interesting question:

Will someone please explain why the Bush White House and the Republican Congress are not trumpeting this economic boom on a daily basis? Their polls are sagging, but the economy is soaring. This simply shouldn̢۪t be.

If former President Clinton had overseen this economy, he’d have held daily Rose Garden news conferences to mark the occasion. In fact, former President Reagan did just that in the booming 1980s — he gave speech after speech touting the success of his supply-side tax cuts. Yet President Bush seldom goes into the current economic story, and when he does it’s just a mention.

Why the silence? Even the media can’t keep mum about this economy: “Consumer confidence is up as gas prices drop.” “New home sales hit record levels in October.” Business capital spending is strong across the board. Core retail sales are surging.

The recovery narrative is not new, but hardly a day passes without the arrival of more positive economic data.

Real GDP has grown at 3 percent or better for ten straight quarters, averaging 4.1 percent at an annual rate for the best performance since the middle 1980s. Wall Street expects the good times to continue, with a consensus of economists predicting 4 percent growth for this year̢۪s fourth quarter.

Business profits have increased at a double-digit pace for nine straight quarters, only the third time this has happened in 55 years. At 8 percent of GDP, after-tax earnings are at a record high. Ditto for household net worth and total U.S. employment. In fact, average monthly job creation over the past two years is running at 179,000, more than five times the GM layoff total.

While I’m less ready than Kudlow to ascribe these figures to the president’s tax cuts and other government policies, the numbers are indeed impressive. Given that Bush was unfairly criticized when the business cycle was going against him, he might as well try to get credit for the turn for the better.

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James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Bithead says:

    Here again comes the issue. POlitics and timing. In essense, you’re asking Bush why he’s not being more agressive in his own defense. Why go on the defensive when he really doesn’t need to at the moment? The fact is the Democrats are so busy with the war thing, they’ve neglected the economy. But nice to know Bush has an answer at his disposal should they ever give up the tired anti-war rethoric.

  2. odograph says:

    As I understand it, the median US household income rose from $42,409 to $43,318, but the poverty rate increased from $12.1 to $12.5

    I’d call that a mixed bag. You know, the conservative thing is that we want “a rising tide to raise all boats.”

    More on west coast states here:

    http://cascadiascorecard.typepad.com/blog/2005/11/up_with_poverty.html

  3. odograph says:

    oops, I should have used “%” not “$” for the poverty rate, of course.

  4. James Joyner says:

    Odo: Not sure how meaningful those comparisons are. How did the poverty baseline track percentagewise? That is, we may just have raised the definitional threshhold of poverty more than incomes rose.

  5. bryan says:

    The recovery narrative is not new, but hardly a day passes without the arrival of more positive economic data.

    Oh, yeah. Like the relatively constant drumbeat of layoffs in the auto industry (among others), or the changes to the bankruptcy laws, or the rise in bankruptcy filings prior to the October change in the laws. Or the rising cost of healthcare (which should offset any raise in household income – it sure has in mine). Or the hole that is New Orleans. Or the enormous budget deficit.

    In short, the economic news is not all good, despite Kudlow’s “Don’t worry, be happy” refrain.

  6. bryan says:

    In fact, average monthly job creation over the past two years is running at 179,000, more than five times the GM layoff total.

    I just noticed this concluding sentence, and shuddered at the apples and oranges comparison. What kind of jobs are being created? Are they comparable in wage to the jobs that are being lost?

    Kudlow also glosses over the recent restatements of earnings by several leading businesses. How are we to believe the claim that “business profits have increased …” if the numbers are adjusted after the fact?

  7. James Joyner says:

    bryan: Even in flush times, there’s bad news in individual sectors. And health care costs have been ballooning for as long as I can remember.

    And I’m not sure how changes to the bankruptcy laws are bad economic news.

  8. bryan says:

    And I’m not sure how changes to the bankruptcy laws are bad economic news.

    Not monetarily bad news in the sense of percent up or down, but news of a negative shade for the overall picture, coupled with recent requirements raising minimum payments on credit card debt. These are the sort of “bad taste, good for you” medicine measures that make for a mixed picture.

    Health care costs have been ballooning for as long as I can remember, too. But that doesn’t mean they are not a negative part of the picture.

    I note you didn’t mention the other points. Look, I hope the economy is not going to tank. I’m out looking for a job right now. But Kudlow is telling only half of the picture to sell a column.

  9. Bithead says:

    What kind of jobs are being created?

    All kinds. Of course, darned few union jobs are being created.

    If your real concern is that the jobs becoming available are non-union, at least have the courage to say so, and have done, Bryan.

    You see, I consider the union movement taking a pounding to be a good thing. THey’ve been choking America far too long.

  10. Rick DeMent says:

    Well how much of the “economic growth” is due to plan old deficit spending? I mean dumping 3 to 500 billion a year in borrowed money is a big chunk of the 3%, no?

    What we should be wondering is with all of the deficit spending (and let’s be honest, that is what the tax cuts are), why is the economy only growing slightly more then the amount of the deficit spending?

  11. odograph says:

    That is, we may just have raised the definitional threshhold of poverty more than incomes rose.

    I suspect it is the opposite. Don’t we exclude energy (and food) costs from core CPI these days, and then adjust numbers like “poverty income” by the core (without energy/food) CPI?

    We know that these folks got the biggest whammy from the gas price run-up.

  12. James Joyner says:

    Bryan: I don’t see Katrina/New Orleans as economic news since it’s a single disaster not part of a trend. Presumably, there will be a priming of the pump that occurs with the rebuilding effort.

    The budget deficit is what it is, although they never seem to hurt the economy. We had a massive budget deficit in the 1990s and still had the huge Internet boom.

    Rick: There’s something to that, I’m sure. So what, though? Some of the growth of the 1980s came as a result of deficit spending, especially in the defense sector.

    Odo: My understading, as that of the late Pat Moynihan, was that COLA adjustments have historically overstated real inflation. And there isn’t a gas price run-up, just a very temporary spike; we’re down to pre-Katrina levels again.

    It looks like we calculate CPI multiple ways. Not sure which one is used as “core.”

  13. odograph says:

    Come on James, have you seen a 5-year gas price graph?

  14. odograph says:

    I went surfing and what I say reinforced my memory that “core CPI” is a current term, and that indexed programs use that.

    It’s actually a very interesting question whether CPI, or any CPI-X, “historically overstated real inflation.” Without addressing “real” I’ll note that it is useful to define CPI in a conservative way, because CPI provides an obvious feedback loop. Higher CPI means higher gov expenditures, which might inflate, and cause a higher CPI, and so on.

    So let’s say we broke inflation by redefining CPI, good so far … but where do we start thinking about “real” inflation? Real for whom?

    If it is “real” for people living in (or on the edge of) poverty, “real” is going to include food and energy as a higher percentage of household expenses than those further up the curve.

  15. odograph says:

    Sorry to post this incrementally, but I’m still waking up.

    I actually think we live in a time of asymmetric inflation. Inflation is out there. We know that house prices go up (good?) and gas prices go up (bad?), but the picture is incomplete. It might even be possible that globalization masks part of this. A hypothetical microwave made in America might have gone up $X, but (luckily?) it is being made in China and has dropped $Y.

    My answer is that the one good number is savings rate. If people are not being inflated out of their take home pay, they’ll manage to put something in the bank. The fact that savings rate went negative recently, coinciding with higher energy prices etc., tells me that we have inflation are are not keeping up.

    Think about it, savings rates go negative, average credit balances climb, home equity drops … those are all signs of true rubber-meets-the-road inflation, even if it isn’t reflected in an “index.”

  16. anjin-san says:

    My guess is that now that interest rates are rising and people can’t continue to use re-fi’s to artificially inflate their standard of living, we will see some cooling off in the economy. I am not sure that a spending spree based on massive borrowing is something we should celebrate, though its certainly something GW knows all about.

    People are waking up and finding they now have little or no equity in their homes. Great, the American dream.