Sylvain’s post, immediately preceding this one, about a recent Don Luskin article, seems to reflect a growing consensus. The economy is in better shape than our little friends in the mainstream media want us to know about.
Jonathan sent me this article, The Bush Boom, by Brian S. Wesbury, which has all kinds of delightful news:
… the third and fourth quarters are on track for what could be 6.0% real GDP growth. Retail sales show a 12.1% annualized increase in the June-August period. Housing starts are at a 17-year high, new and existing home sales have set new records this year, and disposable personal income is up an annualized 9.4% in the past three months. Productivity growth in the non-farm business sector expanded at an astounding 6.8% in the second quarter, while spending on computers and peripheral equipment jumped 57.5% at an annualized rate.
The worm in the apple, at least for Bush’s political fortunes, is the permanent disappearance of manufacturing jobs. “What the economy is experiencing today is a significant structural shift, not just a cyclical one. While manufacturing output has held steady as a share of GDP, manufacturing employment has fallen from 25% of all jobs in 1970 to 11% today.” Count on the media to focus on these manufacturing jobs going away forever, forever, forever … .
Wesbury also notes “a big divergence between the two surveys of employment run by the Bureau of Labor Statistics.” The “Establishment Survey“ shows non-farm payroll jobs falling by “93,000 in August, creating a total job loss of 437,000 for the first eight months of 2003.” This is the source of the media wailing and gnashing of teeth about “jobless growth”. But it is simply not an accurate picture. The BLS’s “Household Survey” shows something very different — “that 1.186 million new jobs have been created this year.” What gives? “[S]ole proprietorships and other small companies are starting up at a faster rate today than they did even in the go-go ’90s. They don’t show up on the Establishment Surveys’ radar because they’re too small and too new. However, the Household Survey catches these jobs by asking workers directly.” If you are in the news media, you pick the unfavorable number for the sitting GOP president, and repeat it over and over until it becomes accepted as “truth”.
Wesbury’s conclusion: “virtually every sector of the economy is booming today, especially high-tech. Weak job growth is an anomaly and cannot last …there should be no doubt that this economy is gathering momentum.”
A similar story is told in this article, entitled 7 reasons the job market is about to take off. Here are the seven reasons:
1. Tax cuts are reinforcing rising consumer income.
2. Government spending is rising rapidly on defense and homeland security.
3. Interest rates are still very low, so credit’s cheap.
4. Corporate investment spending is beginning to recover.
5. The stock market is rebounding, restoring wealth and confidence.
6. Inventories are unusually low, so factories need to increase production just to meet demand.
7. And after several adverse shocks — corporate scandals, Wall Street scandals, foreign wars — it seems the worst is over.
If you want the analysis, read it all.
6 thoughts on “A Bush Boom? Don’t Wait to Hear About it on TV …”
Everyone is more productive because no one wants to get laid off…
Always got to be careful with the longer range statistical comparisons. US population in 1970 was 205 million. We are now clocking around 280 million so the 25% to 11% manufacturing comparison is slightly misleading. In percentage, it looks like manufacturing jobs are down almost 60%. In reality, it’s more like 40%. Over 30 years and given the massive improvements in machinery and productivity, it does not sound so massive to me. The truth is, I did not think there were so many people working in manufacturing in the US.
Also, one ought to ask what kind of manufacturing is included in the stats. Semiconductor and biotech manufacturing has gone from virtually 0 to substantial numbers in the past 30 years.
Economic patterns are shifting, the net changes are more good than bad, and that’s the point. I assume that semiconductor and biotech workers are more productive than are workers in heavy-industry and textile manufacturing. (And where would you rather work?)
None of this would be an issue if the mainstream press were honest with the data. Instead, as Luskin and Wesbury point out so well, the media ignore the overwhelming positives and cherry pick negative data points to support their anti-Bush bias.
One of the best school for statistics reading in the media is Bjorn Lomborg’s book. Masterful stuff.
Did I ever mention “The Skeptical Environmentalist” ?…
Here’s a question for you experts. To what extent has the decline in the ratio of manufacturing jobs to service jobs been responsible for the decline of the income share of the lower quintiles of the population? Is the latter phenomenon due to wage stagnation or to income growth at the higher end?
Sorry, I forgot to sign my post.
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