It's the economy, stupid! Or is it? Gas prices have decreased more than 25 percent in mere months. The stock market is setting records. The annual deficit is shrinking. Amidst all the good news, the party in power in Washington may soon be the party out of power in Washington--at least as far as Capitol Hill is concerned. Corruption (of numerous varieties), deviation from traditional principles, and plain-old wearing out the public's welcome--all of this, and not the economy, will do in the Republican party this Fall. But President Bush remains optimistic. That's a luxury one can afford when one's name does not appear on a ballot.

Dan you should know that those are all headline economic news that-with the exception of gas prices- has little to do with the real pocketbook issues of the average american.

On the deficit, it is widely assumed amongst economists that the deficit figures are cooked. The fiscal situation is probably the worst we've seen since Johnson.

The stock market means little to the majority of Americans who do not recieve any significant income from investments.

On the economic issues that do matter directly to the electorate, the Republican record is not good. Median wages have declined since 2000 in real terms. For most people, the Bush tax cuts were not enough to make up the difference. There is rising job insecurity, renforced by the twin percieved threats of outsourcing and illegal immigration undercutting wages.

Its indisputable that under Bush the US has achieved good GDP growth, seen the stock market recover well, and so far weathered a housing bust.

But there are two fatal flaws in the economic strategy Bush has pursued.

1. Is that it has benefited the rich and the very poor much more than the middle class (ie voters).

2. The current boom is built upon unsustainable trade and fiscal imbalances which MUST be addressed further down the line.

The economic headlines in the past few months may be good for the adminisration, but the economic reality is much differnent- both from the voters' perspective and from an economist's perspective.

Remember when voters talk about the economy, they're not talking about Iraq or terorism- two things most voters have very little personal, direct experience with. They're talking about something they live every day of their lives. No amount of good news statistics or Faux News special reports can shake their perception of thier own economic reality.

A majority of Americans tell pollsters the economy's getting worse.

They're not crazy.

"On the deficit, it is widely assumed amongst economists that the deficit figures are cooked. The fiscal situation is probably the worst we've seen since Johnson." -HeHe

Really? Link to your survey? Methodology included please.

"Median wages have declined since 2000 in real terms. For most people, the Bush tax cuts were not enough to make up the difference. There is rising job insecurity, renforced by the twin percieved threats of outsourcing and illegal immigration undercutting wages." -HeHe

It is a myth cooked up by the NYT that the average American has become worse off.

Firstly, they did not factor in benefits.

Secondly, they used data from a policy think tank that has a clear political agenda. The Bureau of Labor Statistic's study shows that real hourly compensation has increased every year since 2001. Also, it has increased since 2003, where the NYT started their article.

That, and the rest of the article, refuted here;

http://cafehayek.typepad.com/hayek/2006/08/catering_to_ign.html

"The current boom is built upon unsustainable trade and fiscal imbalances which MUST be addressed further down the line." -HeHe

Further down the line? The deficit has dropped by over half since 2004, and, at 1.92 percent of the GDP, is below the 40 year average of approx. 2.3 percent of the GDP. If you have evidence that this data is cooked, please present it.

"Remember when voters talk about the economy, they're not talking about Iraq or terorism- two things most voters have very little personal, direct experience with. They're talking about something they live every day of their lives. No amount of good news statistics or Faux News special reports can shake their perception of thier own economic reality." -HeHe

Hardly. They are reflecting what the MSM tells them about the economy.

The economy is doing just fine. Voter perception of the economy is quite alienated from its reality.

Thirdly, they started their data in 2003, even though the recession ended in Noveber of 2001.

That last line was a sloppy mess up from when I was writing my post. Not supposed to be there. Sorry.

"Those are all headline economic news that -- with the exception of gas prices -- has [sic] little to do with the real pocketbook issues of the average american."

First, you make it sound like the impact of gas prices on the average American is insignificant. But, as a trained economist like Hehe knows, the price of gas affects the price of consumer goods across the board. Obviously, since all of those goods are delivered using vehicles that consume gasoline.

Second, the notion that surge in stock prices doesn't benefit the "average" American is ridiculous. Nearly half of all U.S. households own stock. And the reason stock prices rise is because the companies involved are prospering. Successful companies expand creating more jobs, etc.

Finally, a lower deficit means, among other things, lower interest rates. Lower interest rates mean have a ubiquitous effect on the economy. Monthly payments on home loans, car loans, student loans, etc. are all lower.

If I were you, I'd ask for my money back. Whoever sold you that economics degree is guilty of fraud.

I was wondering who would be the first to use (sic). Appropriate word to use when copying quotes from this guy. Like one of my English professors used to say: You have no argument but make up for it by communicating poorly.

Yikes!

Ben-T your figures way off.

All my info come from The Economist Mag, the EIU, and the Financial Times, all very respected instiutions in economics.

I'll try to link you up later, but off hand I can refute a few things. You deficit figures are just flat wrong.

There is a legitmate debate about the place of benefits in these calulations, but they don't compensate for the fall in real wages.

And just a question: assuming you are correct that the current economic boom is benefiting everyone: why do the polls say differently?

Do you seriously believe that the American public has been brainwashed by the New York Times. Do you really think that when people answer that question, they disregard their own perceptions are parrot an article they probably never read?

I think that's the weakest part of your argument, but I'll get you some data later.

"There is a legitmate debate about the place of benefits in these calulations, but they don't compensate for the fall in real wages." -HeHe

Bureau of Labor Statistics disagrees.

"And just a question: assuming you are correct that the current economic boom is benefiting everyone: why do the polls say differently?" -HeHe

argumentum ad populum is a logical fallacy

OMG. Stop with the logic bs.

Look, I'm not saying it nesescarly follows that because people tell pollsters thet economy is bad, the economy is bad.

I just find Ralph's explanation as to why the poll numbers don't match the macro figures to be wanting.

That's all.

I assumed you were talking to me.

But if the economic data indicates that the boom is benefitting everybody, but polls say otherwise, the data is almost certainly correct. Simply because perception is rarely based on a rigorous, academic, study of what is going on. Its usually based on feelings and anecdotes.

This is not the case with data.

No I agree.

But the data does not bear out the case that the boo m is benefiting everyone.

It's benefiting the very poor (especially immigrants) and the very rich (especially the top 1%ers). But people in the middle are squeezed.

If the only evidence one can cite for a "good" economy is the cooling off in gas prices and the stock market, then that's actually evidence for a rather lousy economy. If you told voters in 2000 that they could look forward to $2.00+ gas in 2006, I don't think you'd get much applause. And if you told people in 2000, when the DJIA was at 11,700, that six years later the DJIA would be at 11,950, no one would say "What a great return!" If you annualize the return it's less than one percent a year. Under Bush the rate of return in the "stock market" is less than in a checking account. And this is just for the Dow. The rate of return in the NASDAQ and S&P is negative.

The American economy is not producing jobs and most importantly the high wage jobs that help build a solid middle class. These jobs are being outsourced to second and third world countries and with the surge in immigration, wages are under even greater pressure.

The deficit is not a picture of our country's fiscal health because the deficit only measures the amount of bonds the federal government has sold and promised to pay back. The deficit does not take into account all the future obligations -- Entitlements -- the government has guaranteed. The deficit -- and the debt -- is just a slice of the total fiscal burdens this country must pay, and under George Bush our fiscal outlook has grown considerably bleaker. Obviously, I don't think a Democratic President will do any better, although it's hard to see how anyone could be worse than Bush.

6.6 million new jobs have been created since 2003, besides unemployment being at the bottom of the barrell. Below 5%, last time I checked.

I say bring back Jimmy Carter.

Eric,

You're Bush is as bad as a liberal Democrat rhetoric is as wrong here as it is elsewhere.

"And if you told people in 2000, when the DJIA was at 11,700, that six years later the DJIA would be at 11,950, no one would say 'What a great return!'"

Well, flying jet-liners into the World Trade Center towers was bound to affect the Dow.

"These jobs are being outsourced to second and third world countries and with the surge in immigration, wages are under even greater pressure."

I'll grant you that immigration is a problem and that Bush has failed miserably in dealing with it; though a Democrat would be as bad or worse without any upside (judicial appointments, "partial-birth" abortion legislation, departmental appointments, tax cuts, etc.).

But outsourcing is inevitable and beneficial to the consumer. My favorite anecdote about outsourcing is that a major company (I forget which one; the story was on NPR) gave its customers the option of having their service call directed to an outsourced office or a domestic office, but if they chose the latter they were charged a fee. The percentage of customers that chose the outsourced office was in the 90s. Besides, what do you want Congress or the President to do. Outlaw outsourcing?

The 9/11 terrorist attacks, while costly, did not nearly have the impact of Hurricane Andrew or Hurrican Katrina and Bill Clinton never had to use Hurrican Andrew -- at the time the costliest disaster in U.S. history -- as an excuse for a poorly performing stock market. Perhaps President Clinton deserves credit for such a strong econony coming on the heels of such a terrible disaster.

On fiscal policy Republicans (Bush) are worse than the Democrats: total federal spending grew at a rate of 4.2% during Clinton's first term and then at an amazing 19.7% during Bush's first term. In fact Clinton's first term is the most fiscally responsible since LBJ -- even more than Reagan's. Plus, George Bush has a Republican Congress to work with and far from being champions of less government they are spending as if it's the last days of Rome.

On immigration it's not that Bush is as bad as liberal Democrats, he's worse: cites to fine employers and work site raids have fallen by 97% under Bush. So while our border enforcement was wholly inadequate under Clinton, it is nonexistent under Bush. President Bush's amnesty speech also was responsible for causing a spike in immigration and he has shown obvious traitor intent by informing the Mexican government on the whereabouts of the Minutemen, who he calls vigilantes.

Of course, President Bush's foreign policy is infintely worse than anything Bill Clinton, Jimmy Carter, Ronald Reagan ever did. When it comes to destroying this country, Bush is in a class all by himself.

With the globalized economy there is probably little we can do to stop outsourcing but I wasn't trying to make policy suggestions, just arguing against the idea that the U.S. economy is performing well. Manufactuirng jobs are vanishing, immigrants are flooding the labor force, and America is not creating jobs in areas where it competes with foreign nations.

http://www.washingtonpost.com/wp-dyn/content/article/2006/10/18/AR2006101801502.html