The resilient U.S. economy remains the envy of the industrialized world, but it gets no respect from a majority of the American people.
The economy is healthy and growing, unemployment is falling, factory orders are surging, exports are rising, inflation is relatively tame, average hourly earnings have risen, interest rates are low by historical standards, and home sales, despite a cooling off, are still at record levels.
Yet polls show that most Americans think the economy is worse than it was, and a majority of people continue to give President Bush low marks for the job he is doing to correct it.
The Gallup Poll reported last week that the public by better than two-to-one (64 percent to 28 percent) thinks things have gotten "worse" in the last five years, and about half of those who think so say "it’s because of an economic-related factor."
Notably, among those who said things have gotten better, 42 percent pointed to an improved economy and jobs.
Still, Bush’s overall marks on economic issues are poor (in the high 30s or low 40s) and the question is — why? White House advisers think his numbers are driven down by Iraq, and as long as that remains a divisive issue among Americans, it will continue to pull Bush’s other scores down with it.
But I think more is going on here that just the war in Iraq. Americans clearly have a disproportionately sour view of the economy that is sharply at odds with reality, at least on a national basis. One can understand why voters in Michigan, for example, think the economy stinks — because of the state’s nearly 7 percent jobless rate, or in Mississippi where unemployment is over 9 percent.
When seen from a higher elevation, however, a sharper picture of the nation’s economy comes into focus. It can’t be seen through one state’s statistics, or even in short-term data, but instead must be viewed over the entire five years of Bush’s presidency. And on this basis, the best numbers we have show a healthy entrepreneurial economy — though, unfortunately, that’s not the way it is reported on the nightly news or by the rest of the news media.
Let’s look at the stats:
- The unemployment rate in January fell to 4.7 percent as employers stepped up their hiring across the board — in construction, manufacturing, professional and business services, education and health care — adding nearly 200,000 jobs to the labor force. Since 2003, when the tax cuts were fully implemented, 4.7 million jobs have been created.
- Factory orders, a pivotal measurement of our economic health, rose by 1.1 percent in December, following an even higher 3.3 percent gain in November. Orders shot up by 8.1 percent for all of 2005 and 9.7 percent in 2004. Who says we aren’t making anything anymore?
- The economy has been growing by better than 3.5 percent a year, a level that is higher than any of the major industrial nations of Europe or the Pacific rim democracies. It’s likely to grow by as much this year, possibly by 4 percent or more as a result of an improving export picture abroad.
- The housing market has cooled somewhat, but it couldn’t maintain the overheated pace of the past few years. The dire predictions of a housing bubble bursting and home values collapsing have not happened. Home sales remain in record territory. More Americans own their home today — more than two-thirds — than ever before in U.S. history.
- The price of oil was falling nicely last year until the fears of a sudden interruption in oil supplies from Iran rattled the futures markets. Last week, the price began to tumble again. The administration is signaling its desire to sell oil and gas leases in the Eastern Gulf waters where huge reserves remain to be tapped to boost supply.
The critical news, which gets lost in the market hysteria over impending fuel shortages, is that U.S. oil and gasoline inventories have been climbing, which will eventually apply downward pressure on pump prices.
- Government deficits and debt are the bogeymen that the doom-and-gloom conmen who like to wreak political havoc, especially in the stock and bond markets. But the feds are expecting higher tax receipts of $2.4 trillion next year, though I think that estimate will be well below the final figure because of higher-than-expected economic growth from a booming global economy.
Look for another $100 billion cut in the budget deficit that will continue to shrink as a share of a nearly $14 trillion-a-year economy.
The bottom line is that the economy is strong and getting stronger. The tax cut pills that Bush prescribed in 2001 were just the right medicine for an ailing economy that has taken some very hard body blows in the past five years but has bounced back faster than the pessimists said it would.
It’s time for those doubting Americans to take a fresh look at a vibrant, innovative, bullish economy that deserves much more respect than it has gotten so far.