The “Bad” Economy

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If you have read any MSM outlet in the past year or so, maybe longer, you would be hard pressed to find any good economic news. Why? Because the MSM hides the good news but highlights anything bad, as usual.

Take for example this recent headline:

Trade Gap Hits Record For 4th Year In A Row

Can you guess which section that was in? Yup, A1.

But the story about the unemployment hitting it’s lowest level since 2001? Section D1.

How about these economic indicators:

The Gross Domestic Product (GDP), a key measure of economic expansion and contraction, increased by 4.3 percent in the third quarter in spite of the devastating hurricanes. Since the second quarter 2003, GDP has grown over 3 percent each quarter.

The November unemployment rate was 5 percent, where the rate has been hovering since May. (The unemployment rate has since dropped to 4.7% in January).

Continuing the solid monthly trend in 2004, 215,000 jobs were added to the economy in November.

Productivity, an indicator of rising living standards, rose more than expected during the third quarter and increased at its highest rate in two years.

Factory orders and orders for durable goods increased by 2.2 percent and 3.7 percent, respectively, in October.

A survey of America’s leading CEOs, the Business Roundtable’s CEO Economic Outlook Survey, showed that they expect “broad strength in the economy moving into 2006.” The CEO Economic Outlook Index for December 2005 was at 101.4. The index is “centered on 50, which means anything above 50 is expansion and anything below 50 is contraction.”

Meg Kreikemeier then writes about how the media is spinning this great economy, in a negative light:

A perusal the New York Times and the Chicago Tribune in late November and through mid-December revealed that almost all of these positive economic trends were found not in the headlines but on pages two or later in the business section.

The New York Times published one front page article, “Upbeat Signs Hold Cautions For the Future,” where the writer hedged the recent results. After noting that gasoline prices had dropped, consumer confidence had increased, new home sales had hit a record, the stock market had finally risen, after remaining relatively flat for years, and factories were expecting a “happy holiday season,” the New York Times wrote:

“By most measures, the economy appears to be doing fine. No, scratch that, it appears to be booming. But as always with the United States economy, it is not quite that simple. For every encouraging sign, there is an explanation.”

Well, yes, there’s always an explanation. And here’s an obvious one: no economy is perfect.

Case in point: In 1996, with the economy humming along nicely, Alan Greenspan warned about irrational exuberance. In the speech where Greenspan coined the phrase he expressed concern about “unduly escalated asset values, which then become subject to unexpected and prolonged contractions.”

Four years later in March 2000, the technology-heavy Nasdaq reached its peak, and the technology bubble began to lose gas. The economy dropped jobs in the months of June, August and October 2000, and job losses continued in 2001 through May 2003.

And this highlights the other obvious fact about economics ? as a dynamic system, the economy waxes and wanes over time.

Certainly it would be ideal if the budget deficit was smaller and gas prices were lower. High gas prices, in particular, not only dampen consumer spending, they also impact manufacturers by driving up operating costs.

But one can always find fault with a component, sector or region. For instance, fourth quarter 2005 GDP growth at 1.1% did not meet expectations. Is it a sign of deterioration or just a bump in the road? According to Market Watch, Treasury Secretary John Snow predicted the result would be revised upward in future months. That isn’t a reason, however, to paint over big improvements with small qualifiers.

Two days after the New York Times reported its story, the job surge in November was released, and, interestingly, both the New York Times and Chicago Tribune wrote articles — not so much about the strength of the result — but about President Bush’s attempts to claim credit for it.

Is it any wonder than that a November poll by the American Research Group, a non-partisan polling organization that has conducted monthly economic surveys since 1985, showed 43 percent of Americans thought the economy was in a recession?

She then goes on to document a search through lexis-nexis which proves her point:

The search turned up 320 articles for President Clinton and 260 for President Bush. The searches produced articles published by well-known news magazines, financial publications as well as trade publications.

A review of the magazines revealed that far more articles were written about President Clinton in the weekly news magazines whereas the bulk of the articles written about President Bush were found in financial and trade magazines and in right-of-center publications like The National Review and The Weekly Standard.

Most glaring was the disparity in coverage by both US News and World Report and Time Magazine.

Not only did US News and World Report and Time Magazine publish significantly more articles about Clinton, but the tone of the articles was very different, as well.

Does any of this surprise anyone? I highly doubt it. The ongoing media bias against this President has reached almost hysterical levels and it shows no signs of waning. I mean you get great news about consumer spending:

Consumers, energized by unusually warm weather and the tame heating bills that went with it, hit the malls with gusto last month, sending retail sales soaring by 2.2 percent — the biggest jump in six years.

The sales spurt, which coincided yesterday with a drop in premium crude oil prices below the psychological threshold of $60 a barrel, sent the Dow Jones Industrial Average surging by 136 points to 11,028.

“You have lower oil prices; you have a healthy employment situation; and you have a consumer that is still willing to do a little bit of spending,” said Gordon Fowler, chief investment officer at Glenmede Trust Co. “That all adds up to a positive for the economy.”

And they put it into section D1. Why would great news like this:

“Retail sales posted stunning results,” said Scott Hoyt, analyst with Moody’s Economy.com, noting that sales at clothing stores soared by 4.6 percent while department stores rang up a 1.6 percent jump in sales. Over the year, sales were up by nearly 9 percent.

Make it onto the front page? Because only something that shows Bush in a bad light is allowed on that page. Hell, even in this backpage story they can’t help but do the “what if”:

The biggest drawback is that the consumer rebound may encourage the Federal Reserve to keep raising interest rates.

Yup, you read that right. The author is basically saying that the great economic news may force the feds to make bad news. How in the hell can anyone win with this mindset? Talk about the glass half empty. Thing is, the glass is always half empty with Bush in office. Was the opposite when Clinton sat in that seat.

Bill at INDC Journal notices the same thing:

An amusing order of headlines over at Drudge:

DOW BACK OVER 11,000 ON SALES SURGE…$$$ Hits 6-Week High Against ???..

OIL FALLS BELOW $60…

Kerry: Economy faltering under Bush…

Not bad, but the editors should have tossed in an …

Unemployment rate drops to a 4 1/2-year low (4.7%)

and a …

U.S. Economy: Retail Sales May Spur Faster Expansion

… for good measure. In related news, Kerry urges investors to buy Google.

Just the other day Gallup released a poll showing:

Despite the positive nature of these so-called “hard” economic indicators, however, the attitudes of the average American consumer toward the economy remain relatively dour. Majorities of Americans rate economic conditions at the moment as “only fair” or “poor,” say economic conditions in the United States are getting worse, and say now is a bad time to be looking for a quality job.

It’s just insane. The economy is growing by leaps and bounds but people still think it’s in the can. I mean the Bush economy is doing just as well, or even better then the Reagan economy:

Well, let?s take a look at the Reagan legacy on federal spending and deficits. In 1980, the last year of Jimmy Carter?s presidency, government outlays were running at 21.7% of GDP and the budget deficit was 2.7% of GDP. (The economy was also a basket case, which is when you would expect budget deficits to be at their worse.) In 1988, Reagan?s last year in office, outlays as a percent of GDP were running at 21.3% with a deficit of 3.1% of GDP. The budget deficit over Reagan?s eight years averaged 4.2% and ran as high as 6.0% in 1983.

Bush entered office with an economy that was booming: in 2000 government outlays ran at 18.4% of GDP with a budget surplus of 2.4%. But the stock market implosion, 9/11 and the war quickly changed the budget dynamics and the surplus switched to a deficit of 3.5% in 2003 and 3.6% in 2004. In 2005, the budget deficit came in at 2.6%, with government outlays running at 20.1% of GDP.

The point here is that there is lot of hyperventilating about the Bush administration?s spending and ?out of control? deficits, much of it by folks who praise Reagan yet trash Bush. But the most recent ?out of control? Bush deficit at 2.6% of GDP is far below the eight-year Reagan average of 4.2%.

This is not meant to disparage Reagan, only to provide perspective. When you look at the numbers on a proportional basis – which is the only way to honestly compare different eras – Bush?s federal spending is not ?out of control,? at least in comparison to Ronald Reagan.

What is not fully appreciated in analyzing the Bush legacy is that the combination of the stock market implosion (Nasdaq: 5,000 ? 1100, S&P: 1500 – 800 ) and the economic impact of 9/11 created a perfect storm of forces that came perilously close to tipping the economy into a deflationary depression. The tandem of the Bush tax cuts (and deficits) coupled with the FED?s fire hose of money led by a 1% FED Funds rate saved the economy from a real disaster. Given the circumstances Bush inherited in his first 18 months in office, the economic growth we have sustained over the last 4 years is nothing short of miraculous. And when it comes to talking about spending and deficits, growth is the most important factor ? something critics of the President seem quick to overlook.

It’s apparent that Bush cannot win with the media and his legacy will not be appreciated by many until years after he leaves. But I can tell you one thing. History will look upon Bush as doing the almost impossible, and doing it well.

I will end this post with a blurb about the European economy and how swell it’s doing:

The Organization for Economic Co-operation and Development, headquartered in Paris, released a report, Going for Growth, that details economic prospects in the industrial world. It is 160 pages long and written in bland, cautious, scholarly prose. But the conclusion is clear?Europe is in deep trouble. These days we all talk about the rise of Asia and the challenge to America, but it might well turn out that the most consequential trend of the next decade will be the economic decline of Europe.

It’s often noted that the European Union has a combined gross domestic product that is approximately the same as that of the United States. But the EU has 170 million more people. Its per capita GDP is 25 percent lower than that of the U.S. and, most important, that gap has been widening for 15 years. If present trends continue, the chief economist at the OECD argues, in 20 years the average U.S. citizen will be twice as rich as the average Frenchman or German. (Britain is an exception on most of these measures, lying somewhere between Continental Europe and the U.S.)

People have argued that Europeans simply value leisure more and, as a result, are poorer but have a better quality of life. That’s fine if you’re taking a 10 percent pay cut and choosing to have longer lunches and vacations. But if you’re only half as well off as the U.S., that will translate into poorer health care and education, diminished access to all kinds of goods and services, and a lower quality of life. Two Swedish researchers, Frederik Bergstrom and Robert Gidehag, note in a monograph published last year that “40 percent of Swedish households would rank as low-income households in the U.S.” In many European countries, the percentage would be even greater.

Yup, America sucks.

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While I agree on some points regarding the unavoidable positive and negative shifts in the economy, the fact still remains that we have a President and Commander in Chief who truly misses the mark in the most important tasks.

Being a member of the Military, it is particularly frustrating to me the way the situation has progressed in Afghanistan and Iraq. Aside from throwing away Billions of Dollars and neary 3000 American lives, we will still not be able to accomplish what Russia could not.

I certainly don’t think that most Americans feel that the tax cuts enacted have made a considerable difference in their daily lives. Only when I interact with Business leaders and large corporations like Kellogg-Brown and Haliburton do I see any dramatic enthusiasm. Of course, they should be, since they are reaping huge rewards from the conflicts that the President has embroiled the country in. The Rich get richer…..

Finally, I don’t consider someone a conservative who effectively annahilates a budget surplus in 3 years, constantly borrows money to place the country in debt, and feels compelled to talk about fiscal responsibility when the microphones are on. The hypocrisy can only be tolerated for so long.

As far as Legacies go, I would place a dishonest philanderer and coward ahead of a dishonest war monger who took every opportunity to avoid raising a weapon himself and placed others at the vanguard of freedom and democracy.