The Bush Boom: Six Years And Counting

Yesterday one of those daily “financial report” blurbettes common to talk radio advised that Canada’s job making machine was continuing to create employment, despite the economic downturn in the US. It was no more that 15 seconds later that the same analyst offered that job growth figures just released in the US exceeded expectations, along with signifcant increases in wages.
That’s pretty typical. If you were walled off in a room somewhere in Chilliwack, with only the CBC and CTV as your sources, you could be forgiven for wondering if America will ever be released from a 7 year recession;

The pessimistas are a persistent bunch. In 2006, they were certain a recession was just around the corner. They were wrong. Instead, the economy posted two consecutive quarters of near or above four-percent growth.
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Here are the facts: Americans are working. The 4.7 percent unemployment number remains at an historical low. On a three-month rolling basis, the U.S. economy has added over 100,000 jobs. Meanwhile, the household job count shows that an average of 303,000 jobs have been added in the last three months. This is noteworthy because it suggests that the job market is turning around.
Hours worked are growing more than 1-percent annually, while workers’ wages are running 3.8 percent, a full percentage point ahead of inflation. As for this week’s productivity report, it was nothing short of spectacular: the 6.3 percent productivity gain was the best in four years. A rise in productivity is good for growth. It’s good for profits. And it’s good for low inflation.
Speaking of inflation, business inflation is down from 3.5 percent just over a year ago to 1.5 percent today. Meanwhile, oil prices have retreated to $88. And, to top it all off, last night we received a tremendous new number showing household net wealth has headed even higher. It stands at a record $59 trillion dollars. That’s more than seven percent above a year ago.

The more things change…

In the 1980s, there was a consensus among the members of the national media that Ronald Reagan was going to fail and that he was going to bring on economic disaster. But…the economy didn’t collapse. In fact, it soared to unprecedented levels.
The media stubbornly refused to admit that “Reaganomics” was responsible. The drumbeat of negative opposition to the president’s policies continued through the 1980s. By 1986…the ratio of negative to positive stories was seven to one. In other words, as the economy was improving, media reports on the economy were becoming increasingly negative.
One of the most common allegations in these reports was that the poor got poorer under Reagan, even though the actual number of poor declined from 14 to 13 percent during his administration, and the average income for the lowest one-fifth of Americans rose from $7,008 to $9,431.
Inflation declined 48%, from 8.9 to 4.6%. Unemployment declined 45%, from 7.5 to 5.2.%. Interest rates declined 71.9%, from 21 to 5.9%. Twenty-one million new jobs were created. The so-called “greedy ’80s” witnessed the largest peacetime economic expansion in our nation’s history, yet the media remained deaf, dumb and blind.

I’ve long maintained that most of what you hear in media about the relative strengths of our economies can be dispelled by driving from Winnipeg to Fargo.