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America's Secret Prosperity
I'm not in front of a TV right now - somebody tell me, is every news channel a-twitter with today's Labor Department report that initial jobless claims dropped by another 20,000 last week?
What do you mean 'no'?
Maybe they're too busy celebrating the fact that unemployment remains at its 4 1/2 year low of 4.7%?
'No' again, huh?
I guess they must be sticking with the big picture - the fact that 2 million jobs have been added in the last 12 months and that there are more American homeowners than at any time in history.
Is your TV even plugged in?
With 9.8% cumulative GDP growth over the last 2.5 years, and annual private investment growth of 8.5% over the same period, it seems hard not to attribute this surge in prosperity to 2003's pro-investment, pro-growth tax cuts.
Furthermore, states that saw increases in new jobless claims (like Michigan, which saw a rise of 8,000) were largely affected by layoffs in the automobile industry, whose troubles we can pin not on fiscal or monetary policy, but on oil prices and the crippling effect of legacy labor and healthcare costs wrought by entrenched union labor. Excluding this effect, the report is even sunshinier.
The only potential downside to all this gitup'n'go in the labor market is the degree to which it may fuel inflation (if unemployment holds below the theoretical "natural rate", it can cause the economy to run too hot, ergo inflation). In the Fed minutes released earlier this week, we did hear that inflation - while not currently worrisome - is toward the higher end of what the Fed would tolerate (though excluding food and energy, it was a tame 2.1% over the last 12 months). Still, if inflation does notch upward, the worry is that we'll see further extension of the current streak of interest rate hikes, which could put the brakes on corporate spending and, in turn, output growth.
For now though, this economy is so good...
How good is it:
And Tax Cuts Said, "Let There Be Growth."
Pay Attention, America!
2006 Economic Report of the President
Speaking of Taxes
Reason #411 Why Congress Must Make the Tax Cuts Permanent
Liveblogging the State of the Union
Oh Tax Cuts, Is There Anything You Can't Do?
Tax Cuts To the Rescue
Yet More Good Economic News
The Facts Are Not Enough
I Believe I Can Buy
In On the Secret:
Blogs for Bush
Tracked at:
Stop the ACLU
Handcrafted by Flip on February 23, 2006 |
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Comments
And oddly, you completely dismiss the news that annual income has once again decreased. Wouldn't a good indicator of the economy be, I dunno, how much money people are making compared to how much money they used to be making?Posted by: Nor | Feb 23, 2006 2:42:07 PM
Yes, that would be a good indicator. I'm not sure where you're getting your data, but annual income is on the rise. The real (inflation adjusted) annualized GDP growth for each of the 11 quarters since the tax cuts is as follows: 3.7%, 7.2%, 3.6%, 4.3%, 3.5%, 4.0%, 3.3%, 3.8%, 3.3%, 4.1%, 1.1%. (BEA data available at http://www.bea.gov/bea/dn/gdpchg.xls ) That yields a compound annual real growth rate of 2.4%. Unless domestic population is growing faster than 2.4%/year (estimated at 0.9%/year, it's not even close), we must have an expanding real per capita GDP as well.Posted by: Flip | Feb 23, 2006 3:02:33 PM
http://news.yahoo.com/s/ap/20060223/ap_on_bi_ge/family_financesPosted by: Nor | Feb 23, 2006 3:05:07 PM
Ah, well there's your problem. *Taps timing belt* That comparison is 2004 vs. 2001, not 2005 vs. 2003. I'm looking at the 2.75 years since the Bush tax cuts were passed and how the economy has fared in this new, more growth-oriented posture. In a word: swimmingly.Posted by: Flip | Feb 23, 2006 3:17:12 PM
