Per Hour Wage increases and good 3rd qtr mean Bush economy a plus?

[papau]

The ABCNote does what is becoming its standard spin to the right and asks, based on the above facts (see NYT and LATimes articles below) if the Dems need to figure out how to explain why a president who presides over this much growth is still a "miserable failure."

http://www.latimes.com/news/printedition/la-na-econ26oct26004422,1,5846538.story


http://www.nytimes.com/2003/10/27/business/27WAGE.html?hp=&adxnnl=1&adxnnlx=1067274434-vafCIBAbdf4qhMrtMgj11g

Gains in Wages Expected to Give Economy a Lift
By DAVID LEONHARDT and EDMUND L. ANDREWS

Published: October 27, 2003


Wage increases for employees at almost all income levels are giving important and unexpected support to the nation's economy. If the gains continue, they offer hope that the rapid economic expansion of recent months could prove more durable than other spurts of growth over the last two years.

Forecasters expect the Commerce Department to say in its quarterly report on Thursday that the economy grew about 6 percent in the three-month period ending in September, which would be the fastest pace since 1999. Most of that growth stemmed from a sharp rise in consumer spending, driven largely by a continuing boom in mortgage refinancing and checks that were mailed out as part of the recent tax cut.

With those forces receding and business spending still slack, the economy will depend increasingly on regular paychecks, analysts say. Hourly wages have already surprised most economists by growing more quickly than inflation since 2001 in spite of the worst decline in employment in 20 years.

The wage gains have not been enough to overcome the economy's problems, however. Many families still have less income than they did a year ago because companies have reduced their workers' hours, and health care costs have risen rapidly. But economists say that the wage raises have provided a buffer, allowing consumer spending to continue rising every quarter for the last 12 years, according to the Commerce Department.
<snip>

The Economy Revs Up, but Can't Overtake Uncertainty
Forecasters' uncertainty about a recovery worries politicians. Spurt's effect on job market is unclear.

By Peter G. Gosselin, Times Staff Writer

WASHINGTON — As 2003 winds down and the presidential campaign ramps up, most mainstream economists agree that the U.S. economy is expanding at its fastest pace in four years.

When the gross domestic product for the July-September quarter is announced Thursday, it is expected to show that the economy barreled forward at an annual rate of 6% or perhaps even 7% — a performance unmatched since the glory days of the '90s boom. <snip>

But Sinai and many other economists stop just short of saying that a self-sustaining recovery is underway. "I want to see more evidence," said the veteran forecaster. <snip>

But consumers also have been buoyed by tax cuts and mortgage refinancing. Many analysts believe that the combination was responsible for much of the economy's stellar performance in the just-finished quarter, but worry that those spurs to growth are now largely spent. <snip>

...whether the economy helps or hurts the president's reelection chances (is an open question).

[mhr]

1. Yes, But Where Are The Jobs? Still Unemployed Here!

eom

[papau]

3. Seems your point is key - the Bush accountants can give PR releases but

can Bush produces jobs.

[meegbear]

2. As of this Saturday ...

unemployed for one full year.

Recovery my ass.

[diplomats]

4. I wonder if this growth can be sustained

If I recall, growth in the first quarter of 2002 was more than 5 percent, but the economy petered out after that. I believe I saw an article a week or so ago where economists said growth already was slowing down. BTW, if the third quarter was so good because of consumer spending, wht wasn't Bush's approval on the economy higher the last three months?

[Pliny The Younger]

5. The REAL Question....

....should be: Is the government REALLY any more than a fringe player on th economic scene? My answer is NO!! There is little the government can actually do to improve an ailing economy, although there are certainly things they can do to damage it. The economy is FAR bigger than the federal government, although I understand the need for politicians to take credit for economic growth, whether they've done anything to take credit for or not.

The two most obvious things the government can do is to keep interest rates low and to reduce the tax burden on the American citizen.

[diplomats]

6. If you reduce the tax burden at the federal level

all you end up doing is passing the buck to the states. That's what's happening now. The states are in a huge fiscal bind. And cutting taxes adds to the deficit, which is a drag on economic growth.

[papau]

9. Agree - Savings equal investment =growth, and Deficits are negative saving

and indeed - Long range interest rates have a range for any given economic level of activity relative to available capital - a lousy economy and you get low interest rates (near zero in Japan) - but the gov deficit forever projections done by those with capital to invest means the 10 year rates will be on the high of that range - so the lousy economy rate will be low, but it will be a higher rate than would be out there if folks did not anticipate higher future government demand for loans from the public due to the deficit.

In effect lower interest rates and lower taxes are a bit contradictory - as lower taxes often lead to higher than they would otherwise be interest rates.

And in any boardroom the fellow selling a capital investment is saying that the investment will return more than just socking the money away in a savings account or bond - it will cover a "hurdle" rate - and that rate consists of the projected 10 year rate based on the current 10 year rate (and this is where Gov Deficit comes in) plus a risk premium that the Board has defined as adequate for new investment in that area of the business.

More gov deficits - and business capital spending will be less than it would otherwise be. It does not mean no business investment spending growth when you have deficits - it does mean you have less than you could have had with a better administration in power.

We must get rid of Bush if we want an economy that is growing as fast as possible.

[zbdent]

7. Well, when you let go low-wage earners, and their unemployment

compensation runs out (drop-offs are not counted in the "new claims" counts!), and your higher-ups are still getting a paycheck, then:

The average wage goes up!!

I'm not a statistical analyst, but I know that they throw out the extremes and work from there, but it wouldn't surprise me if this misAdministration threw out the low-wage workers and kept the high-wagers to skew their picture for the better.

It's sad when the most creative people in the country are accountants.

[Speck Tater]

8. The real problem is the difference between "average" and "typical"

If you have nine homeless street people in a room with one multi-millionaire the average net worth of the people in the room is over a million dollars each so the "economy" of that room is flourishing. Statistically you have ten people who, on average, can each afford a new car so you might expect to sell ten new cars in the next year. By that measure things are definitely looking up for the automotive industry.

But then what happens in the following year? Only one of those ten people buys a new car because only one can afford a new car. The typical person in the room is flat broke, so the projections of a rosey economic future for the car industry based on average income rather than typical income is just wrong.

Now along comes a tax refund and home refinancing and puts a couple hundred extra dollars in the pockets of each of those ten people. They run right out and buy a new pair of shoes and warm coat for winter, creating a sudden increase in retail sales. But next week that windfall cash is gone and they are all back to being unemployed and flat broke. One time windfalls cannot be the basis of long term economic growth any more than "average" net worth can be used to measure the health of the economy.

[guitar man]

10. Where's my raise?

If wages are going up,I sure can't tell. I haven't had a raise in 2 1/2 years. I had to transfer to an affiliate station 90 miles from home to keep my job,so I hit them up for another dollar an hour,but when I figure in my commuting costs,I can't count that as a raise. I am working 90 miles from home for 10 bucks an hour. We have got to get rid of Bush and Co.!